Eastern District of New York
Press releases recorded for this federal judicial district.
Former Chief Financial Officer Sentenced to 20 Months’ for Role in $30 Million Bank Fraud SchemeRead the Press Release
Earlier today, Thomas Torre, the former Chief Financial Officer of Metro Fuel Oil Corp., was sentenced to 20 months’ imprisonment, three years of supervised release, and ordered to forfeit $800,000 in criminal proceeds. On May 20, 2015, Torre pled guilty to conspiring to commit bank fraud by overstating Metro Fuel’s accounts receivable in order to draw from a revolving line of credit issued by New York Commercial Bank (NYCB). The fuel company later filed for bankruptcy after fraudulently obtaining over $30 million from NYCB. The sentencing proceeding was held before United States District Judge Pamela K. Chen.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York. Mr. Capers expressed his grateful appreciation to the Federal Bureau of Investigation, New York Field Office, the agency responsible for leading the government’s investigation in this case.
For sixty consecutive months, from 2007 to July 2012, Torre submitted false certificates to NYCB that falsely overstated the company’s accounts receivables. The bank used the information in the certificates to determine the amount Metro Fuel could borrow on its revolving line of credit. Torre misrepresented the true accounts receivable by deliberately failing to account for the cash payments received from customers and by creating fictitious invoice amounts. By September 2012, the fuel company could no longer pay its bills and filed a voluntary petition for bankruptcy. At the time of the bankruptcy, the company owed NYCB more than $30 million.
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorney William P. Campos is in charge of the prosecution, with assistance provided by Assistant United States Attorney Brian Morris of the Office’s Civil Division, which is responsible for the forfeiture of assets.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
The Defendant:
Thomas Torre
Age: 63
Albertson, New YorkE.D.N.Y. Docket No. 14 - CR - 514 (PKC)
Sea Cliff Man Indicted for Scheme to Defraud More Than $1 Million from Elderly Woman’s EstateRead the Press Release
A four-count indictment was unsealed today in the United States District Court for the Eastern District of New York charging the defendant John Derounian with mail fraud, wire fraud, and aggravated identity theft in connection with a scheme to defraud the estate of an elderly victim of more than $1.2 million. The indictment was returned under seal by a federal grand jury sitting in Central Islip, New York, on July 26, 2016.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Philip Bartlett, Inspector-in-Charge, United States Postal Inspection Service, New York Division.
“Driven by greed, the defendant allegedly went to great lengths to perpetrate his fraudulent scheme to steal an elderly woman’s entire life-savings. Such conduct cannot, and will not, be allowed to go unpunished,” stated United States Attorney Capers. “This Office and the United States Postal Inspection Service are committed to protecting members of our community from fraudsters, especially those who target the elderly.” Mr. Capers extended his appreciation to Morgan Stanley for its invaluable cooperation during the investigation.
“To devise a scheme to steal from the deceased is despicably morbid. Mr. Derounian’s alleged crimes are unconscionable. Postal Inspectors have no tolerance for anyone who preys on innocent victims, either dead or alive, and will spare no resources to ensure those who commit these crimes are brought to justice,” stated Postal Inspector-in-Charge Bartlett.
As detailed in the initial complaint, prior court proceedings, and the indictment unsealed today, Derounian is charged for his role in a scheme to steal the entire estate of a woman, who is identified in the indictment as Jane Doe. On November 12, 2015, Derounian claimed to have found the body of Jane Doe, Derounian’s tenant, at her Sea Cliff home. Subsequent to Jane Doe’s death, Derounian is alleged to have placed a series of telephone calls and sent emails to Morgan Stanley in an effort to drain Jane Doe’s financial accounts of over $200,000.
Further, in an effort to perpetuate the fraud, Derounian created a forged will naming himself as the executor and sole beneficiary, aside from a comparatively small charitable donation, of Jane Doe’s estate. Derounian allegedly then used the authority of the forged will to cremate the body of Jane Doe and sell her real property for over $1 million, which he transferred into bank accounts he controlled. As a result of the investigation to date, funds totaling over $1.2 million have been seized from Derounian, and the indictment seeks forfeiture of those funds.
The defendant, who was previously arrested on a complaint and detained, is scheduled to be arraigned this morning before United States District Judge Joan M. Azrack at the federal courthouse in Central Islip.
The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being handled by the Office’s Long Island Criminal and Civil Sections. Assistant United States Attorneys Mark E. Misorek and Robert W. Schumacher are in charge of the prosecution.
The Defendant:
JOHN DEROUNIAN
Age: 51
Sea Cliff, New YorkE.D.N.Y. Docket No. 16-412 (JMA)
Member of United States Army Sentenced to 10 Month Sentence for Theft and Sale of Military-Issued Night Vision TechnologyRead the Press Release
Earlier today in federal court in Brooklyn, Johnathan Serrano, a member of the United States Army, was sentenced to a 10 month sentence (6 months’ imprisonment and 4 months’ home confinement), ordered to forfeit $10,200 in criminal proceeds to the government, and ordered to pay $67,000 in restitution to the United States Army following his conviction after a guilty plea on April 26, 2016 to one felony count of conspiracy to steal and sell government property, in violation of Title 18, United States Code, Section 371. Today’s sentencing proceeding was held before Judge I. Leo Glasser.
The conviction stems from Serrano’s leadership in a scheme to steal and sell night-vision devices and components stolen from the United States Army. Night vision technology allows images to be produced and seen in near-total darkness conditions and is a vital tool for the military. Night vision devices acquired by the United States military, such as the items stolen and sold by the defendant, contain components made to military specifications and are required by the military to be rendered useless for their intended purpose prior to leaving government control. The United States military’s policies prohibit the private sale of fully-functional military-issued night vision equipment.
The defendant is an active-duty member of the United State Army, who was stationed at Fort Bliss base in El Paso Texas and assigned to perform repairs of radio technology. Between April 2014 and May 2015, Serrano used his access to the repair facilities at the military base to steal numerous components for night vision devices. To conceal his role in the conspiracy, Serrano had his cousin, co-conspirator Alan Serrano, and another individual, sell the devices over the internet via the eBay website and email communications with prospective buyers.[1] The investigation revealed that the conspirators sold or attempted to sell over $10,000 worth of night vision equipment, including to a purchaser in Brooklyn, New York. Additionally, five night vision devices and 50 boxes with serial numbers matching night vision components were recovered from the conspirators’ residences. In total, Serrano and his co-conspirators stole over $120,000 worth of equipment from the United States Army.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Craig Rupert, Special Agent-in-Charge, Department of Defense, Defense Criminal Investigative Services (DCIS), New York; Angel M. Melendez, Special Agent-in-Charge, Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), New York; and Diego G. Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), New York Field Office.
The government’s case is being prosecuted by Assistant United States Attorney Craig R. Heeren.
The Defendants:
JOHNATHAN SERRANO
El Paso, Texas
Age: 31ALAN SERRANO
El Paso, Texas
Age: 25
[1] On March 4, 2016, Alan Serrano pled guilty to unlawful sale of government property. His sentencing is scheduled for tomorrow before Judge Glasser.
Robert L. Capers Joined Queens District Attorney and Queens Borough President at the First-Ever Hate Crimes ForumRead the Press Release
Robert L. Capers, United States Attorney for the Eastern District of New York joined Queens District Attorney Richard A. Brown and Queens Borough President Melinda Katz at the first-ever Hate Crimes Forum yesterday in Queens Borough Hall, where law enforcement and community leaders and advocates discussed in depth what constitutes a hate crime and how these crimes are investigated and prosecuted.
“My office shares the commitment of the District Attorneys, law enforcement agencies and advocacy groups within the Eastern District of New York to making the district a safer place for everyone, by conducting outreach to prevent hate crimes and assisting our state partners or bringing federal prosecutions as appropriate,” stated U.S. Attorney Capers. “Crimes motivated by bias - whether against a race, gender, religious affiliation, sexual orientation or otherwise - will be addressed head on, with the goal of justice for all. We cannot reach our full potential and promise as a country until every person can live free from discrimination, harassment and violence.”
District Attorney Brown said, “In 1987, my office was the first District Attorney’s Office in New York City to establish a unit specifically focused on the prosecution of individuals who victimize others based on their own prejudices. Hate crimes – whether motivated by sexual orientation, gender, religious or ethnic bias – will never be tolerated in Queens County.”
Queens Borough President Katz said, “Yesterday’s Hate Crimes Forum helped reconvene a broad spectrum of community leaders, advocates and stakeholders to review the laws and procedures related to how hate crimes are investigated and prosecuted. Hate crimes are taken very seriously in the Borough of Queens, and combating it requires the collaboration of various entities. Thank you to District Attorney Brown, the NYPD and U.S. Attorney Robert Capers for working with my office to host this important forum.”Assistant Commissioner for the Law Enforcement Bureau at the New York City Commission on Human Rights Sapna V. Raj said, “Everyone in New York City deserves to be treated with dignity and respect. The Commission enforces one of the strongest City anti-discrimination laws in the nation and strives to educate every New Yorker about protections under the law. Yesterday’s forum provided a great opportunity for advocates and community members to learn about the City’s many resources and services available to victims of discrimination.”
More than 50 different community groups and organizations attended the Hate Crimes Forum, which included formal presentations from the invited speakers and a question and answer segment to zero in on community concerns.
Featured Speakers Included:
▸ Robert L. Capers, the U.S. Attorney for the Eastern District of New York
▸ Deputy Inspector Mark Magrone, the commanding officer of the New York City Police Department’s Hate Crimes Task Force
▸ Queens Assistant District and Section Chief Attorney Michael E. Brovner, of District Attorney Brown’s Gang Violence and Hate Crimes Bureau
▸ Assistant Commissioner Sapna V. Raj, of New York City’s Commission on Human Rights
▸ Lead Advisor Rama Issa, Community Relations Bureau, of the New York City Commission on Human Rights
The goal of the forum was to reach out to the vibrant Queens community of organizations and community groups in order to provide information about the law enforcement response to hate crimes. The turnout reflected a vast diversity of ethnic, racial, religious, sexual orientation and geographical interest, to name a few. In turn, it also provided an opportunity for law enforcement representatives to hear about the community concerns in regards to this topic, as well as some others.In addition to the featured speakers, there were several pieces of hate crime prevention artwork displayed at the venue. The thought-provoking images were created for an annual art contest and exhibition established by the Organization of Chinese Americans-New York Chapter. The competition was designed to engage young people and to encourage them to speak out against hate crimes through creative expression.
The conference was organized by Assistant District Attorney Mariela Palomino Herring, Bureau Chief of District Attorney Brown’s Gang Violence and Hate Crimes Bureau, under the supervision of Executive Assistant District Attorney Jesse Sligh, Special Prosecutions Division, and in collaboration with Susie Tanenbaum, Director of Immigrant and Intercultural Affairs, Queens Borough President’s Office.
Members of Queens-Based Drug Trafficking Crew Indicted for Heroin Trafficking Conspiracy, Kidnapping, and Firearms OffensesRead the Press Release
Earlier today, an indictment was unsealed charging Gonzalo Erick Aguilar Vargas, also known as “Erick Aguilar” and “Erick Vargas,” Hillary Calle, Kiancin Lee, also known as “Mala,” Monica Vargas, and Ricky Vargas with conspiring to traffic heroin, conspiring to kidnap, kidnapping, and possessing and brandishing firearms in relation to the charged heroin trafficking and kidnapping crimes. The defendants are scheduled to be arraigned this afternoon before United States Magistrate Judge Steven M. Gold at the federal courthouse in Brooklyn, New York.
The charges and arrests were announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Angel M. Melendez, Special Agent-in-Charge, New York, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI); James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York Division; and William J. Bratton, Commissioner, New York City Police Department (NYPD).
As alleged in the indictment, on February 6, 2015, a member of the defendants’ drug trafficking crew was arrested while picking up a parcel containing heroin sent from Ecuador through John F. Kennedy International Airport into Queens, New York. The crew member was released from law enforcement custody later that day. The following day, the defendants kidnapped the crew member and his female companion in Manhattan so that their leader, Gonzalo Erick Aguilar Vargas, could confront him regarding the lost parcel of heroin. Hillary Calle, Monica Vargas, and Ricky Vargas drove the two victims to New Jersey and then returned with them through Manhattan to Queens, where they waited for other crew members to arrive. Kiancin Lee and another crew member subsequently arrived and ordered the kidnapped crew member into a vehicle. When he refused, Ricky Vargas, Kiancin Lee, and the other crew member viciously assaulted him using firearms. The victim crew member ultimately escaped and his female companion was later released.
“As detailed in the indictment, the defendants were members of a drug trafficking organization that imported heroin from Ecuador through John F. Kennedy Airport and distributed it throughout the New York City area,” stated United States Attorney Capers. “The defendants allegedly kidnapped and viciously assaulted a member of their crew after he was arrested in another case in order to enforce their control over the crew’s activities. As this prosecution demonstrates, we are committed to working closely with our local partners, including city, state, and federal law enforcement, to rid our communities of the ravages of drug trafficking and its related violence.” Mr. Capers extended his grateful appreciation to the Office of Queens County District Attorney Richard A. Brown for its assistance with this investigation and prosecution, as well as the New York Field Office of United States Customs and Border Protection.
“Drugs and guns are a deadly combination and every seizure makes our community safer. These arrests and indictments demonstrate our relentless pursuit to remove drug traffickers from our streets,” said HSI New York Special Agent-in-Charge Melendez. “The safety of our communities is one of HSI’s top priorities. HSI and our state, federal, and local law enforcement partners pool information and resources to target drug smuggling and related criminal elements.”
“Underscoring the brutality linked with drug trafficking, the Vargas organization’s alleged crimes are a reminder of the dark side of drug trafficking-firearms offenses, kidnappings, and assaults. By working with our federal, state, and local law enforcement partners, five alleged members of a violent heroin trafficking organization were investigated, indicted, and arrested,” said DEA New York Special Agent-in-Charge Hunt.
“This investigation is the latest example of the multi-agency collaboration needed to combat crime from Ecuador to the tarmac at John F. Kennedy airport. That collaboration that resulted in today’s arrest for alleged kidnapping and firearms offenses was all to further an illicit and violent drug business,” said New York City Police Commissioner Bratton. “I commend the work of the investigators and prosecutors involved in making this case.”
The charges contained in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted of all counts, defendants Gonzalo Erick Aguilar Vargas, Kiancin Lee, and Ricky Vargas face a mandatory minimum of 17 years’ imprisonment and a maximum of life imprisonment. The defendants Hillary Calle and Monica Vargas face a mandatory minimum of 10 years’ imprisonment and a maximum of life imprisonment.
The government’s case is being prosecuted by the Office’s Organized Crime and Gangs Section. Assistant United States Attorney Patrick T. Hein is in charge of the prosecution.
The Defendants:
GONZALO ERICK AGUILAR VARGAS, also known as “Erick Aguilar” and “Erick Vargas”
Age: 23HILLARY CALLE
Age: 23KIANCIN LEE, also known as “Mala”
Age: 23MONICA VARGAS
Age: 44RICKY VARGAS
Age: 24E.D.N.Y. Docket No. 16-CR-406
MS-13 Gang Members Pled Guilty to Murder of 19-Year-Old Man on Long IslandRead the Press Release
Earlier today, defendants Milton Contreras and Jose Osmin Rubio pled guilty to the murder of a 19-year-old victim on Long Island. The guilty pleas were entered before United States Magistrate Judge Ramon E. Reyes, Jr., at the federal courthouse in Brooklyn, New York. In the past month, two additional defendants pled guilty and admitted their participation in the murder – defendant Byron Lopez pled guilty before United States District Court Judge Margo Brodie on July 5, 2016, and defendant Oscar Welman Espinoza-Merino pled guilty before Judge Reyes on July 28, 2016. When sentenced, the defendants face up to life imprisonment, as well as restitution and a fine.
The guilty pleas were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Angel M. Melendez, Special Agent-in-Charge, New York, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations, (HSI); Delano A. Reid, Special Agent-in-Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives, New York Field Division (ATF); and William J. Bratton, Commissioner, New York City Police Department.
In announcing thee guilty pleas, U.S. Attorney Capers expressed his grateful appreciation to the Suffolk County Police Department for its assistance with the investigation.
As detailed in the superseding indictment, the four defendants are members of the Jamaica, Queens and/or Brentwood, Long Island chapters of the violent street gang La Mara Salvatrucha, also known as “MS-13.” On February 25, 2014, Lopez, Espinoza-Merino, Contreras and Rubio directed the victim, fellow gang member Sidney Valverde, to travel to Long Island under the false pretense that they needed him to assist in gang business there. In fact, the co-conspirators planned to kill Valverde because they believed that he was providing information about the gang’s activities to law enforcement. After Valverde arrived in Long Island, the co-conspirators shot him in the back of the head and left his body on Miller Place Beach in Suffolk County where it was discovered by a beachcomber approximately two weeks later.
This case is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York targeting members of the MS-13, a violent international criminal organization. The MS-13’s leadership is based in El Salvador and Honduras, but the gang has thousands of members across the United States. With numerous branches, or “cliques,” the MS-13 is the largest and most violent street gang on Long Island. Since 2003, hundreds of MS-13 members, including dozens of clique leaders, have been convicted on federal felony charges in this district. A majority of those MS-13 members have been convicted on federal racketeering charges for participating in murders, attempted murders, and assaults. Since 2010 alone, this Office has obtained indictments charging MS-13 members with carrying out more than 30 murders in the Eastern District of New York, and has convicted dozens of MS-13 leaders and members in connection with those murders.
The government’s case is being handled by the Office’s Organized Crime and Gangs Section. Assistant United States Attorney Alixandra Smith is in charge of the prosecution.
The Defendants:
BYRON LOPEZ
Age: 25
Queens, New YorkOSCAR WELMAN ESPINOZA-MERINO (“Speedy” and “Petey”)
Age: 23
Brentwood, New YorkMILTON CONTRERAS (“Diabolico”)
Age: 20
Brentwood, New YorkJOSE OSMIN RUBIO (“Slow”)
Age: 25
Brentwood, New YorkE.D.N.Y. Docket No. 14-463 (MKB) (RER)
International Narcotics Distributor Pleads Guilty to Multiple Narcotics and Money Laundering ConspiraciesRead the Press Release
Earlier today, Salvador Jimenez Uribe, also known as “Salvador Uribe Jimenez,” pleaded guilty before United States District Judge Raymond J. Dearie in the federal courthouse in Brooklyn, New York, to a four-count superseding indictment for his involvement in an international cocaine importation conspiracy and international narcotics importation, distribution, and money laundering conspiracies. When sentenced, Jimenez faces up to life in prison.
The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York Division. The investigation was led by the DEA New York Organized Crime Drug Enforcement Strike Force.
According to court filings and facts presented during the plea proceeding, between approximately July 1, 2007 and February 26, 2008, Jimenez and his co-conspirators imported hundreds of kilograms of cocaine, as well as more than five kilograms of heroin, and more than a thousand kilograms of marijuana, from Mexico into the United States and distributed those narcotics in the New York area, including in the Eastern District of New York. Jimenez, a Mexican citizen, also worked with others during that time period to transport millions of dollars of proceeds from the sale of those narcotics back to Mexico, in a way that concealed the true source of the proceeds and avoided financial transaction reporting requirements. Between Approximately May 1, 2012 and March 15, 2015, Jimenez again conspired with others to import more than five kilograms of cocaine.
The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section. Assistant United States Attorneys Hiral D. Mehta and Craig R. Heeren are in charge of the prosecution.
The Defendant:
SALVADOR JIMENEZ URIBE
Age: 50
Residence: Guadalajara, MexicoEDNY Docket No. 12-CR-603 (RJD)
Individual Responsible for Telephone-Related Extortion Schemes to Appear Today in Federal CourtRead the Press Release
Earlier today, a complaint was unsealed charging Hani Kabbara, a Canadian citizen, with conspiracy to commit access device fraud. According to the complaint, the defendant was the mastermind of a sophisticated scheme that used overseas call centers to conduct telephone extortion scams to extract from victims financial products called MoneyPaks. These Moneypaks were then sold in online criminal forums or converted to cash by Kabbara using fraudulently-obtained prepaid debit cards. The defendant is scheduled to appear this afternoon before United States Magistrate Judge Steve M. Gold at the U.S. Courthouse in the Brooklyn New York.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Diego Rodriguez, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI).
As alleged in the complaint, the defendant obtained hundreds of thousands of dollars in MoneyPaks from victims of his extortion schemes he ran from his overseas call centers. He demanded payment from his victims in the form of MoneyPaks, which are vouchers that can be loaded with funds and used to fund prepaid debit cards. The defendant sold the MoneyPaks in online criminal forums or, with his co-conspirators, transferred the funds onto prepaid debit cards, which themselves were obtained using stolen personally identifiable information. The defendant and his co-conspirators, who communicated with each other anonymously in cyberspace through dark web forums and encrypted chat applications, then used a crew of workers in and around the New York metropolitan area to withdraw funds from the debit cards, consolidate the cash, and send it back to the defendant in Canada.
The defendant was arrested in New York City on August 1, 2016.
“Cybercriminals terrorize innocent, often elderly, victims through the use of telephone extortion schemes and believe they can operate with impunity behind encrypted chats and online monikers,” stated United States Attorney Capers. “Today’s arrest sends the message that we are watching, we will find you, and we will bring you to justice.”
“As alleged, Kabbara was a mastermind of schemes. First, he used a call center to extort victims for hundreds of thousands of dollars using Moneypaks. Then he and his co-conspirators moved those funds to pre-paid debt cards, which were obtained using stolen personal information. The FBI is committed to investigating those who commit cybercrime and bringing them to justice, no matter where in the world they may reside,” stated FBI Assistant Director in Charge Rodriguez.
The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being handled by the Office’s National Security & Cybercrime Section. Assistant United States Attorney Una A. Dean is in charge of the prosecution.
The Defendant:
HANI KABBARA
Age: 31
Nationality: CanadianE.D.N.Y. Docket No. 16-M-691
Georgia Trader Pleads Guilty to Largest Known Computer Hacking and Trading SchemeRead the Press Release
Earlier today, Leonid Momotok, of Suwanee, Georgia, pleaded guilty to conspiracy to commit wire fraud for his role in an international scheme to hack into three business newswires and steal yet-to-be published press releases containing non-public financial information that was then used to make trades that generated approximately $30 million in illegal profits. The guilty plea was entered before United States Magistrate Judge Ramon E. Reyes, Jr. at the federal courthouse in Brooklyn, New York. When sentenced, Momotok faces up to 20 years in prison, as well as restitution, criminal forfeiture, and a fine.
The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office.
“Using non-public press releases stolen by overseas hackers, Momotok and his group of traders engaged in a brazen scheme that was unprecedented in its scope, impact and sophistication,” stated United States Attorney Capers. “Today’s guilty plea demonstrates our steadfast commitment and preparedness to combating the ever-evolving threat of cybercrime and to protecting the integrity of our financial markets.” Mr. Capers thanked the Securities and Exchange Commission (SEC) and the Department of Justice’s Office of International Affairs (OIA) for their cooperation and assistance in the investigation.
“In one of the most sophisticated insider trading cases we’ve seen to-date, Momotok and other traders used information to trade on from not yet released press releases obtained by hackers from newswire services. The scheme profited the traders approximately $30 million in ill-gotten profits. Today’s guilty plea should send a message to others who seek to cheat the system for a lucrative payday- these schemes only end with prison time and forfeiture of those profits,” stated Assistant Director-in-Charge Rodriguez.
According to court filings and facts presented at the plea hearing, between February 2010 and August 2015, computer hackers based in Ukraine gained unauthorized access into the computer networks of Marketwired L.P., PR Newswire Association LLC (PRN), and Business Wire (collectively, the “Newswire Companies”). The hackers used a series of sophisticated cyber-attacks to gain access to the Newswire Companies’ computer networks. Once in the computer networks, the hackers stole press releases about upcoming announcements by public companies concerning earnings, gross margins, revenues, and other confidential and material financial information. At one point, one of the hackers sent an online chat message in Russian to another individual stating, “I’m hacking prnewswire.com.” In another online chat, the hackers stated that they had compromised the log-in credentials of 15 Business Wire employees.
To capitalize on this stolen information, the hackers shared the stolen press releases with Momotok and other traders through overseas servers. In a series of emails, the hackers provided the traders with credentials and instructions on how to access and use the overseas servers. To assist the hackers steal the most valuable information, the traders created “shopping lists” or “wish lists” for the hackers listing desired upcoming press releases from Marketwired and PRN for publicly traded companies. Once Momotok and the other traders received the stolen press releases, they used that information to execute trades ahead of the issuance of the press release. In order to execute trades before the press releases were made public, Momotok and the other traders sometimes had to execute trades in extremely short windows of time. Frequently, all of this illegal trading activity occurred on the same day. Momotok and the other traders traded on stolen press releases containing material nonpublic information about publicly traded companies that included, among hundreds of others: Align Technology Inc.; Caterpillar Inc.; Hewlett Packard; Home Depot; Panera Bread Co.; and Verisign Inc.
Momotok and his co-conspirators’ gained more than $30 million from their illegal trades. In exchange for providing Momotok and the other traders with the stolen press releases, the hackers received a percentage of the illegal proceeds, which were transferred to them through foreign shell companies.
* * *
The government’s case is being prosecuted by the Office’s Business and Securities Fraud and National Security and Cybercrime Sections. Assistant United States Attorneys Christopher A. Ott, Christopher L. Nasson and Richard M. Tucker are in charge of the prosecution, with assistance provided by Assistant United States Attorneys Brian D. Morris and Tanisha Payne of the Office’s Civil Division, which is responsible for the forfeiture of assets.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit ww.StopFraud.gov.
The Defendant:
LEONID MOMOTOK
Age: 48
Residence: Suwanee, GeorgiaE.D.N.Y. Docket No. 15-CR-381 (RJD)
Former Top Leaders of Venezuela’s Anti-Narcotics Agency Indicted for Trafficking Drugs to the United StatesRead the Press Release
An indictment was unsealed today in United States District Court for the Eastern District of New York charging Nestor Luis Reverol Torres, the former General Director of Venezuela’s La Oficina Nacional Antidrogas (ONA) and former commander of Venezuela’s National Guard, and Edylberto Jose Molina Molina, the former Sub-Director of ONA and currently Venezuela’s military attaché to Germany, with participating in an international cocaine distribution conspiracy.[1] The indictment was returned under seal by a federal grand jury in Brooklyn, New York, on January 21, 2015, and relates to Reverol’s and Molina’s alleged activities from January 2008 to December 2010, when they served as the top officials for ONA, Venezuela’s government agency charged with combating narcotics trafficking.
The indictment was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York Division; and Angel Melendez, Special Agent-in-Charge, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), New York.
According to court documents, from January 2008 to December 2010, in their then official capacities at ONA, Reverol and Molina received payments from drug traffickers in exchange for assisting the drug traffickers in distributing cocaine for ultimate importation into the United States. For example, in exchange for such payments they alerted the traffickers to future drug raids or the locations where law enforcement officers in Venezuela were conducting counter-narcotics activities to allow drug traffickers to change the location where they stored drugs or alter drug transportation routes. They also took steps to stop or hinder ongoing narcotics investigations to allow cocaine-laden vehicles to leave Venezuela and arranged for the release of individuals arrested for narcotics violations and the release of narcotics and narcotics-related currency that had been seized by law enforcement. Reverol and Molina also prevented the arrest or deportation of individuals targeted by foreign countries, such as the United States, for prosecution on drug-related charges.
The indictment is the second indictment unsealed in the Eastern District of New York against alleged corrupt high-level officials in Venezuela who allegedly assisted narcotics traffickers in importing cocaine into the United States. On March 20, 2013, a third superseding indictment was unsealed charging Vassyly Kotosky Villaroel Ramirez, also known as “Mauro” and “Angel,” a captain in the Venezuelan Guardia Nacional, and Rafael Antonio Villasana Fernandez, an officer in the Venezuelan Guardia Nacional, with participating in an international cocaine distribution conspiracy between January 1, 2004 and December 1, 2009. According to court documents, Kotosky and Villasana allegedly used official government vehicles to transport more than seven metric tons of cocaine from the Colombian border to various airports and seaports in Venezuela for ultimate importation into the United States.
“The indictment announced today reflects our ongoing efforts to combat one of the most insidious and dangerous aspects of the international drug trade – the ability of drug cartels to infiltrate and corrupt the highest echelons of government and law enforcement,” said U.S. Attorney Capers. “Nothing can be more damaging to law enforcement’s efforts to stop the flow of illegal drugs than when corrupt public officials violate the public’s trust by actively assisting drug traffickers in their deadly criminal activities.” Mr. Capers extended his grateful appreciation to the DEA’s New York Drug Enforcement Task Force[2] and the Department of Homeland Security, Homeland Security Investigations (HSI) New York El Dorado Task Force,[3] the agencies responsible for leading the investigation, and to the invaluable assistance provided by the DEA Bogota Country Office, the DEA Miami Field Office, and the U.S. Attorney’s Office for the Southern District of Florida.
DEA Special Agent-in-Charge Hunt stated, “As alleged, Nestor Luis Reverol Torres and Edylberto Jose Molina Molina used their positions of power to enable drug trafficking organizations, all the while hindering law enforcement’s efforts to thwart them. Simply put, the indictments send a message that here is no difference between a drug trafficker and a drug trafficker who leads anti-narcotics trafficking efforts. Drug law enforcement working in the U.S. and overseas will continue to stop those at every level and every profession who supply or abet the distribution of poison to American doorsteps.”
“Today’s indictment emphasizes that no one is above the law. These former government officials allegedly used their positions of trust to feed their greed, and along the way betrayed their oath of service by warning drug traffickers of sensitive law enforcement operations,” said Special Agent-in-Charge Melendez of HSI New York. “We will continue to work tirelessly with our federal and international law enforcement partners to expose criminals who attempt to cross our borders with illicit drugs.”
The government’s case is being prosecuted by the Office’s International Narcotics and Money Laundering Section. Assistant United States Attorneys Gina M. Parlovecchio and Hiral Mehta are in charge of the prosecution.
The Defendants:
NESTOR LUIS REVEROL TORRES
Age: 51
VenezuelaEDYLBERTO JOSE MOLINA MOLINA
Age: 53
VenezuelaE.D.N.Y. Docket No. 15-CR-020
[1] The charge in the indictment is merely an allegation, and the defendants are presumed innocent unless and until proven guilty.
[2] The New York Drug Enforcement Task Force comprises agents and officers from the Drug Enforcement Administration, New York City Police Department, and the New York State Police.
[3] HSI New York Office’s El Dorado Task Force comprises over 240 members from more than 29 law enforcement agencies in New York and New Jersey – including special agents, state and local police investigators, intelligence analysts, and federal prosecutors – with the assistance of the task force’s High Intensity Financial Crimes Area (HIFCA)/Intelligence Unit.
New York Doctor Convicted of Multimillion-Dollar Health Care FraudRead the Press Release
A New York surgeon who practiced at hospitals in Brooklyn and Long Island, New York, was convicted last night for submitting millions of dollars in false and fraudulent claims to Medicare.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Robert L. Capers of the Eastern District of New York, Assistant Director in Charge Diego G. Rodriguez of the FBI’s New York Division and Special Agent in Charge Scott Lampert of the U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG) New York Regional Office made the announcement.
Syed Imran Ahmed, 51, of Long Island, New York, was convicted of one count of health care fraud, three counts of making false statements related to health care matters and two counts of money laundering.
According to evidence presented at trial, Ahmed submitted millions of dollars in false claims to the Medicare program for incision-and-drainage and wound debridement surgeries that he did not perform. Trial evidence showed that many of the claims also falsely stated that the surgeries were performed in an operating room, even though Ahmed never performed the surgeries. The evidence introduced at trial showed Ahmed submitted over $25 million in false claims to the Medicare program for surgeries he never performed and he received over $3 million from Medicare as payment for the false claims.
The FBI and HHS-OIG investigated the case, which was brought as part of the Medicare Fraud Strike Force under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Eastern District of New York. Fraud Section Trial Attorneys Turner Buford and Debra Jaroslawicz and Senior Litigation Counsel Patricia Notopoulos of the Eastern District of New York are prosecuting the case.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,900 defendants who have collectively billed the Medicare program for more than $10 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.
New York Doctor Convicted of Multi-Million Health Care FraudRead the Press Release
BROOKLYN, NY – Late yesterday, a New York surgeon who practiced at hospitals in Brooklyn and Long Island was convicted for submitting millions of dollars in false and fraudulent claims to Medicare after a three-week jury trial.
The conviction was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Assistant Director in Charge Diego G. Rodriguez of the FBI’s New York Division and Special Agent in Charge Scott Lampert of the U.S. Department of Health and Human Services - Office of Inspector General (“HHS-OIG”), New York Regional Office, made the announcement.
Syed Imran Ahmed, 51, of Long Island, was convicted after trial of one count of health care fraud, three counts of making false statements related to Medicare claims and two counts of money laundering.
According to evidence presented at trial, Dr. Ahmed, a surgeon, submitted millions of dollars in false claims to the Medicare program for incision-and-drainage and wound debridement surgeries that he did not perform. Many of the claims also falsely stated that the surgeries were performed in an operating room, even though Dr. Ahmed never performed the surgeries in an operating room or anywhere else. The evidence introduced at trial showed Dr. Ahmed submitted over $25 million in false claims to the Medicare program for surgeries he never performed. Dr. Ahmed received over $3 million from Medicare as payment for the false claims.
The FBI and HHS-OIG investigated the case, which was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Eastern District of New York. Fraud Section Trial Attorneys Turner Buford and Debra Jaroslawicz and Senior Litigation Counsel Patricia Notopoulos of the U.S. Attorney’s Office of the Eastern District of New York are prosecuting the case.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,900 defendants who have collectively billed the Medicare program for more than $10 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.
Former President of Guatemalan Soccer Federation Pleads Guilty to Racketeering and Corruption ChargesRead the Press Release
Earlier today in federal court in Brooklyn, Brayan Jiménez, the president of the Guatemalan soccer federation (FENAFUTG) from 2009 to 2015, pleaded guilty to racketeering conspiracy and wire fraud conspiracy in connection with his receipt of bribes in exchange for the awarding of contracts for the media and marketing rights to FIFA World Cup qualifier matches, and for authorizing certain “friendly” matches played by the Guatemalan national soccer team. Jimenez also agreed to forfeit $350,000. At sentencing, Jiménez faces a maximum sentence of 20 years for each count. Today’s plea proceeding took place before United States Magistrate Judge Robert M. Levy.
The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Diego G. Rodriguez, Assistant Director in Charge, FBI, New York Field Office; and Acting Special Agent in Charge Anthony J. Orlando, IRS Criminal Investigation, Los Angeles Field Office.
According to court filings and facts presented during the plea proceeding, Jiménez negotiated and accepted bribes totaling hundreds of thousands of dollars in exchange for his agreement to exercise his influence as the president of FENAFUTG to award contracts to Media World, a Florida sports marketing company, for the media and marketing rights to the Guatemalan national soccer team’s home World Cup qualifier matches for the 2018 and 2022 editions of the World Cup. Over a period of years, Media World transmitted these bribes from its U.S. bank accounts to the defendant and a co-conspirator, often using intermediaries in the United States and Guatemala.
The guilty plea announced today is part of an investigation into corruption in international soccer being led by the U.S. Attorney’s Office for the Eastern District of New York, the FBI New York Field Office, and the IRS-CI Los Angeles Field Office. The prosecutors in Brooklyn are receiving considerable assistance from attorneys in various parts of the Justice Department’s Criminal Division in Washington, D.C., including the Office of International Affairs, the Organized Crime and Gang Section, the Asset Forfeiture and Money Laundering Section, and the Fraud Section, as well as from INTERPOL Washington.
Assistant U.S. Attorneys Evan M. Norris, Amanda Hector, Paul Tuchmann, Nadia Shihata, Keith D. Edelman, and Brian D. Morris of the Eastern District of New York are in charge of today’s prosecution.
The government’s investigation is ongoing.
The Defendant:
BRAYAN JIMÉNEZ
Age: 62
Nationality: GuatemalaE.D.N.Y. Docket No. 15 CR 252 (S-1)
Barred Long Island Automobile Transportation Broker Sentenced to 30 Months in Prison for Mail FraudRead the Press Release
Earlier today in Central Islip, New York, Gregory Sclafani, an automobile transportation broker, was sentenced to 30 months’ imprisonment to be followed by three years of supervised release based on his March 31, 2016, guilty plea to mail fraud. The defendant was also ordered to pay his victims restitution. In 2011, the defendant was permanently enjoined from providing automobile transportation services in New York following a civil lawsuit filed by the New York State Attorney General’s Office in 2009.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York.
In announcing the sentence today, U.S. Attorney Capers stated, “The defendant’s scheme to victimize unsuspecting customers was particularly brazen in that it was executed while the defendant was permanently enjoined from engaging in the transportation brokerage business. He has now been held to account.” Mr. Capers extended his grateful appreciation to the United States Postal Inspection Service; United States Department of Transportation, Office of Inspector General; New York State Police; and the New York State Attorney General’s Office for their assistance in the case.
From 2007 until his arrest in 2014, the defendant made fraudulent representations to induce customers to use him as a broker for the long-distance hauling of their vehicles and then failed to deliver the services as contracted. When aggrieved customers complained, the defendant ignored the complaints and retained the customers’ money. Additionally, once in possession of the customers’ bank account information that had been provided for the services, the defendant made repeated unauthorized withdrawals from their bank accounts. In an effort to conceal the ongoing fraud and to thwart the defrauded customers’ attempts to obtain refunds, the defendant frequently changed the names of the brokerage companies he controlled and used aliases when speaking to the aggrieved customers.
The scheme victimized at least 100 individuals.
The sentencing proceeding was held before United States District Judge Denis R. Hurley.
The government’s case is being handled by the Office’s Long Island Criminal Section. Assistant United States Attorney Charles N. Rose is in charge of the prosecution.
The Defendant:
GREGORy SCLAFANI
Age: 64
Southampton, New YorkE.D.N.Y. Docket No. 14-CR-639 (DRH)
Brooklyn Man Sentenced to Life for Murder to Obstruct Bank Fraud InvestigationRead the Press Release
This afternoon, Naquan Reyes was sentenced to life imprisonment by United States District Judge Sandra L. Townes at the federal courthouse in Brooklyn, based on his conviction for murdering Nicole Thompson. Judge Townes also imposed a forfeiture judgment in the amount of $184,000. According to court filings, and as admitted by Reyes during his guilty plea, Reyes paid another individual to murder Ms. Thompson to prevent her from cooperating with law enforcement and undermining a lucrative and long-standing scheme to defraud banks in the New York area.
The plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Diego G. Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); and David E. Beach, Special Agent-in-Charge, United States Secret Service, New York Field Office.
As alleged in the government’s sentencing memorandum, between 2008 and his arrest in 2014, Reyes perpetrated a scheme to defraud various banks of more than $800,000. As part of the scheme, Reyes secured employment at more than half a dozen banks and, relying in part on knowledge he acquired from his employment, Reyes created counterfeit checks and recruited others to deposit those checks into their and others’ bank accounts. Reyes and his coconspirators then attempted to withdraw the funds from the bank accounts before the banks learned the checks were counterfeit. Among those he recruited to make the deposits was Nicole Thompson. On July 16, 2010, Thompson was arrested by the New York City Police Department in connection with her role in the scheme, and she immediately decided to cooperate with law enforcement. When Reyes learned of Thompson’s plans to cooperate, and thereby jeopardize his ongoing fraud scheme, Reyes paid another individual to murder her and then traveled from New York to Maryland to personally dispose of her body. On July 24, 2010, Thompson’s body, duct taped and wrapped in garbage bags, was found in a dumpster in Landover, Maryland. Thompson was 24 years old at the time of her murder. Reyes later brazenly commented that he would “do it again if [his] life was on the line. It was either me or her.” After his arrest, rather than accept full responsibility for his crimes, Reyes tried to persuade an ex-girlfriend to lie to law enforcement in an apparent attempt to receive credit for purported cooperation.
Mr. Capers expressed his grateful appreciation to the Prince George’s County, Maryland Police Department, New York City Police Department, and Bronx County District Attorney’s Office for their significant cooperation and assistance in the investigation.
The government’s case is being prosecuted by Assistant United States Attorneys Elizabeth Kramer, Elizabeth Geddes, Samuel Nitze and Karin Orenstein.
The Defendant:
NAQUAN REYES
Age: 31
Brooklyn, NYE.D.N.Y. Docket No. 14-CR-0227
Six Defendants Including Three Former Members of the United States Military Charged with Interstate Gun TraffickingRead the Press Release
A seventeen-count indictment was fully unsealed yesterday in the United States District Court for the Eastern District of New York charging Marquez Bridges, Micah Isaiah Desuze, Dominique Chanel Fairnot, Jeremy Sanchez, Ashanti Sease-Matthews, and Omar Jermaine Walker with conspiracy to deal in firearms and making false statements to acquire firearms. Jeremy Sanchez, who was the most recent defendant arrested in this case, is scheduled to be arraigned before the Honorable Magistrate Judge Robert Levy at 2:00 p.m. this afternoon. The next status conference in the case is scheduled for August 4, 2016 before the Honorable Allyne R. Ross.
The charges and arrests were announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); and William J. Bratton, Commissioner, New York City Police Department (NYPD).
“We stand committed to stemming the flow of illegal firearms into our communities,” stated United States Attorney Capers. “All too often, firearms brought into New York illegally end up in the hands of criminals and result in acts of violence.” Mr. Capers extended his grateful appreciation to the United States Air Force Office of Special Investigations.
“Illegal guns most often end up in the hands of criminals who usually don't abide by the laws designed to protect society. A disturbing facet of this case is that several of the subjects were former members of the military, trusted to defend our nation, and make it safer. These weapons have made our communities more dangerous,” stated FBI Assistant Director-in-Charge Rodriguez.
“This department has no tolerance for those who traffic illegal guns into our city,” said New York Police Commissioner Bratton. “I commend the work of the detectives and agents whose work resulted in these arrests.”
As set forth in the indictment and other documents filed by the government, between October 2015 and April 2016 the defendants purchased more than 70 firearms from stores and gun shows in Georgia. The firearms were transported to the metropolitan New York City area, where they were sold in illegal transactions on the street. The defendants, who acted as straw purchasers, made false statements to obtain the firearms. In particular, the defendants lied on ATF Form 4473, a form gun purchasers are required to complete to verify, among other things, that they are not purchasing firearms on behalf of others. Three of the defendants, Desuze, Sease-Matthews, and Walker, are former members of the United States military.
The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted, the defendants face a maximum prison term of ten years.
The government’s case is being prosecuted by the Office’s Organized Crime & Gangs Section. Assistant United States Attorneys Margaret E. Gandy and Rena Paul are in charge of the prosecution.
The Defendants:
MARQUEZ BRIDGES
Age: 26
Atlanta, GeorgiaMICAH ISAIAH DESUZE
Age: 24
Atlanta, GeorgiaDOMINIQUE CHANEL FAIRNOT
Age: 26
Atlanta, GeorgiaJEREMY SANCHEZ
Age: 26
Atlanta, GeorgiaASHANTI SEASE-MATTHEWS
Age: 23
Atlanta, GeorgiaOMAR JERMAINE WALKER
Age: 26
Savannah, GeorgiaE.D.N.Y. Docket No. 16-CR-326
Registered Broker Pleads Guilty to Securities Fraud for Particpating in A $131 Million Market Manipulation SchemeRead the Press Release
Earlier today, Naveed Khan, a registered broker, pleaded guilty to securities fraud in connection with the fraudulent market manipulation of ForceField Energy Inc. (ForceField), a publicly-traded company listed on the NASDAQ under the ticker symbol “FNRG.” The guilty plea was entered before United States Magistrate Judge Ramon E. Reyes, Jr. at the federal courthouse in Brooklyn, New York. When sentenced, Khan faces up to 20 years in prison, as well as restitution, criminal forfeiture, and a fine.
The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office.
According to court filings and facts presented at the plea hearing, between January 2009 and April 2015, the defendant, together with others, engaged in a scheme to defraud investors in ForceField, a purported worldwide distributor and provider of LED lighting products and solutions, by artificially controlling the price and volume of traded shares of ForceField through, among other means: (1) using nominees to purchase and sell ForceField stock without disclosing this information to investors and potential investors; (2) orchestrating the trading of ForceField stock to create the appearance of genuine trading volume and interest in the stock; and (3) concealing payments to stock promoters and broker dealers who promoted and sold ForceField stock to investors and potential investors while claiming to be independent of the company. The fraudulent scheme caused a loss of approximately $131 million to the investing public.
Between October 2014 and April 2015, a ForceField executive paid kickbacks to Khan in exchange for purchasing ForceField stock in his clients’ brokerage accounts. Khan and ForceField did not disclose to Khan’s clients the kickbacks Khan was receiving for purchasing ForceField stock. Khan and his co-conspirators took pains to conceal their participation in the fraudulent scheme by using prepaid, disposable cellular telephones and encrypted, content-expiring messaging applications to communicate with each other, and by paying kickbacks in cash.
The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Christopher L. Nasson and Mark E. Bini are in charge of the prosecution.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit ww.StopFraud.gov.
The Defendant:
NAVEED KHAN
Age: 33
Residence: Staten Island, New YorkE.D.N.Y. Docket No. 16-CR-234 (BMC)
Long Island Dermatologist Settles Claims That He Defrauded Medicare and MedicaidRead the Press Release
United States Attorney Robert L. Capers and Scott J. Lampert, Special Agent-in-Charge, Health and Human Services, Office of Inspector General (HHS-OIG), New York Region, today announced that the United States has entered into a civil settlement agreement with Deremedx Dermatology, P.C. d/b/a Dermatique and Dr. Barry A. Solomon to resolve a case brought under the federal False Claims Act. Solomon is the owner of, and sole practitioner at, Dermatique. The agreement resolves an investigation involving allegations that, in contravention of Medicare and Medicaid regulations, Solomon engaged in a host of fraudulent billing practices and submitted false claims to government healthcare programs.
Under the terms of the civil settlement agreement, Solomon and Dermatique will pay a total of $302,227.11. Solomon will also enter into an Integrity Agreement to provide compliance oversight for the next three years. The civil settlement agreement was approved by United States District Court Judge Leonard D. Wexler.
The government’s investigation revealed that between approximately June 2009 through at least 2014, Solomon repeatedly billed for services performed as if he were supervising the procedures even though he was not in the office during the procedures and was, at least in some cases, out of the country. Solomon also billed for so-called “impossible days,” in which he submitted claims for more hours than he could have possibly worked. In one of those instances, Solomon billed Medicare for more than 26 hours in one calendar day. Finally, the investigation revealed that Solomon occasionally double billed Medicare for certain examinations and procedures.
The investigation commenced with the filing of a qui tam complaint by Relator Diane Vitale. Under the federal False Claims Act statute, a private individual who has uncovered fraud against the government may file a suit in federal court on behalf of the United States. If the United States is successful in resolving those claims, the individual who filed the complaint may receive a share of the recovery.
“Health care providers who engage in fraudulent billing practices, including billing for services and procedures they did not perform, jeopardize critical government healthcare programs. The message today is clear – if you engage in such conduct you will be held to account,” stated U.S. Attorney Capers.
“Solomon’s fraudulent billing practices compromised the integrity of taxpayer-funded health programs, and won’t be tolerated” said Lampert, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “HHS-OIG is committed to holding healthcare providers accountable for the services they provide to our most vulnerable citizens.”
The United States’ case was handled by Assistant U.S. Attorney Kenneth M. Abell.
The Defendant:
BARRY A. SOLOMON
Age: 59
Residence: Long Beach, New YorkFormer Leader of Burglary Crew Sentenced to 10 YearsRead the Press Release
Earlier today, at the United States District Court in Central Islip, New York, the Hon. Joseph F. Bianco sentenced Nikitas Margiellos, a former leader of a Long Island burglary crew, to 10 years’ imprisonment, three years supervised release and ordered to pay $1,700,000 million in restitution following his August 19, 2014, plea of guilty to interstate transportation of stolen property.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Madeline Singas, Nassau County District Attorney; Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office; Thomas C. Krumpter, Acting Commissioner, Nassau County Police Department; Shantelle P. Kitchen, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York; and William J. Bratton, Commissioner, New York City Police Department.
In announcing the imposition of sentence, U.S. Attorney Capers extended his grateful appreciation to each of the participating agencies and offices.
Between 2009 and 2012, Margiellos was one of the leaders of a burglary crew that committed approximately 37 commercial burglaries and eight residential burglaries in Nassau and Suffolk Counties stealing approximately $8,000,000 in cash and property. Margiellos participated in every one of the 45 burglaries. The crew used traditional burglary tools, such as blow torches, crowbars, wire cutters, and sledge hammers, as well as more modern technology, including cell phone jammers and police scanners, to commit the burglaries. They also often conducted surveillance of their victims to determine when the homes and businesses would be unoccupied. On at least one occasion, crew members installed a tracking device on a victim’s car to assist in this endeavor.
On January 21, 2016, Judge Bianco sentenced co-defendant Rafael Astacio, who was a NYPD Detective at the time he committed the burglaries, to a term of imprisonment of 72 months following his plea of guilty. On January 19, 2016 and April 21, 2016, following their pleas of guilty, co-defendants Leonard Repka and Victor Arias were sentenced to terms of imprisonment of 24 months and 54 months, respectively. Three additional co-defendants are awaiting sentencing.
The government’s case is being prosecuted by the Office’s Long Island Criminal Office. Assistant United States Attorney Christopher C. Caffarone and Special Assistant United States Attorney Rick Whelan are in charge of the prosecution.
The Defendant:
NIKITAS MARGIELLOS
Age: 43
West Babylon, New YorkE.D.N.Y. Docket No. 13-CR-640 (JFB)
Lebanese National Extradited from Malaysia to Face Charges in Wide-Ranging Counterfeit Currency Plot with Ties to Lebanon and IranRead the Press Release
Defendant Sold High-Quality Counterfeit U.S. Currency to Undercover Secret Service Agent Posing as Member of New York-Based Criminal Enterprise
On July 22, Louay Ibrahim Hussein had his initial appearance at the federal courthouse in Brooklyn, New York, before U.S. Magistrate Judge Lois Bloom. Hussein is charged in connection with his leadership role in a wide-ranging scheme to distribute large quantities of high-grade counterfeit U.S. currency believed to be produced with support from sponsors in Lebanon and Iran for sale and use in markets across the globe, including in the United States and Europe. Hussein, a Lebanese national, was arrested in Kuala Lumpur, Malaysia, in 2014, and arrived in the United States on Thursday, July 21, following extradition proceedings. Earlier today, Hussein was ordered detained by U.S. Magistrate Judge Robert M. Levy until he can satisfy the terms and conditions of a proposed substantial bond package.
The charges were announced by U.S. Attorney Robert L. Capers for the Eastern District of New York, Special Agent in Charge David E. Beach for the U.S. Secret Service’s New York Field Office and Assistant Director in Charge Diego G. Rodriguez for the Federal Bureau of Investigation’s New York Field Office (FBI).
As alleged in the complaint and related filings, the charges against the defendant arose from a long-term undercover investigation in which the defendant and his co-conspirators sold hundreds of thousands of dollars in counterfeit currency to an agent with the U.S. Secret Service who was posing as a member of a New York-based criminal enterprise. Over the course of several months in 2012, the defendant, through intermediaries located overseas, sold the agent nearly $150,000 in high-quality counterfeit $100 bills and nearly $150,000 in counterfeit Euro notes. In October 2013, the defendant attempted to make another sale to the agent in Cyprus of approximately $300,000 in counterfeit currency, again through intermediaries. In June 2014, the defendant and co-defendant Nazer Al-Shekh Mosa aka Mohammed Hasan Haidar, a Syrian national, sold the undercover agent approximately $170,000 in counterfeit currency in Kuala Lumpur, Malaysia. Hussein and Mosa were arrested in August 2014 in Malaysia, pursuant to provisional arrest requests from the United States, during an attempt to sell additional counterfeit currency to the undercover agent. Mosa waived extradition last year, pleaded guilty to conspiracy to distribute counterfeit currency on April 20, and is awaiting sentence. A U.S. - based co-conspirator, Mouafak Al Sabsabi, also was arrested in August 2014. Al Sabsabi pled guilty to conspiracy to distribute counterfeit currency and was sentenced principally to time served and a three year term of supervised release on May 31.
The investigation has revealed that Hussein and his co-defendants are members of a multinational criminal network engaged in the production and distribution of counterfeit U.S. currency. In conversations with the undercover agent and others, Hussein claimed to have access to as much as $800 million in high-quality counterfeit U.S. currency for sale to clients based in Iran and elsewhere, and offered to procure weapons, narcotics and counterfeit currency and to have them shipped through U.S. ports.
“The reliability of U.S. currency is a pillar of the global financial system. As alleged, counterfeiters such as the defendant and his co-conspirators exploited that reliability and threatened the stability it provides, all to serve their own greed,” said U.S. Attorney Capers. “This investigation sends the message around the world that counterfeiters, wherever located, can and will be brought to justice.”
U.S. Attorney Capers extended his grateful appreciation to the New York Field Offices of the U.S. Secret Service and the FBI, to the Justice Department’s Office of International Affairs and to the Royal Malaysian Police and Attorney General’s Chambers for their assistance in the investigation and in effecting the defendant’s extradition.
“This investigation highlights the immeasurable effectiveness of law enforcement partnerships in combatting fraud,” said Secret Service Special Agent in Charge Beach. “We will continue to work closely with our domestic and international partners to defeat criminal enterprises and protect the Nation’s financial infrastructure.”
“We are pleased that Louay Ibrahim Hussein was extradited and will now face the U.S. justice system for his role in a charged international counterfeit currency ring,” said Assistant Director in Charge Rodriguez. “As uncovered in a multi-year investigation with the U.S. Secret Service, we allege Hussein and his co-conspirators sold more than a half a million dollars of counterfeit U.S. currency with the help of sponsors in Lebanon and Iran. Additionally, Hussein claimed to have access to millions more. Counterfeit currency doesn’t just devalue authentic currency, it weakens markets and global economies.”
The charges in the complaint are merely allegations and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being handled by the Office’s National Security & Cybercrime Section. Assistant U.S. Attorneys Samuel P. Nitze and J. Matthew Haggans are in charge of the prosecution.
Lebanese National Extradited from Malaysia to Face Charges in Wide-Ranging Counterfeit Currency Plot with Ties to Lebanon and IranRead the Press Release
On July 22, 2016, Louay Ibrahim Hussein had his initial appearance at the federal courthouse in Brooklyn, New York, before U.S. Magistrate Judge Lois Bloom. Hussein is charged in connection with his leadership role in a wide-ranging scheme to distribute large quantities of high-grade counterfeit U.S. currency believed to be produced with support from sponsors in Lebanon and Iran for sale and use in markets across the globe, including in the United States and Europe. Hussein, a Lebanese national, was arrested in Kuala Lumpur, Malaysia, in 2014, and arrived in the United States on Thursday, July 21, following extradition proceedings. Earlier today, Hussein was ordered detained by U.S. Magistrate Judge Robert M. Levy until he can satisfy the terms and conditions of a proposed substantial bond package.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, David E. Beach, Special Agent in Charge, United States Secret Service, New York Field Office, and Diego G. Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).
As alleged in the complaint and related filings, the charges against the defendant arose from a long-term undercover investigation in which the defendant and his co-conspirators sold hundreds of thousands of dollars in counterfeit currency to an agent with the United States Secret Service who was posing as a member of a New York-based criminal enterprise. Over the course of several months in 2012, the defendant, through intermediaries located overseas, sold the agent nearly $150,000 in high-quality counterfeit $100 bills and nearly $150,000 in counterfeit Euro notes. In October 2013, the defendant attempted to make another sale to the agent in Cyprus of approximately $300,000 in counterfeit currency, again through intermediaries. In June 2014, the defendant and co-defendant Nazer Al-Shekh Mosa, also known as Mohammed Hasan Haidar, a Syrian national, sold the undercover agent approximately $170,000 in counterfeit currency in Kuala Lumpur, Malaysia. Hussein and Mosa were arrested in August 2014 in Malaysia, pursuant to provisional arrest requests from the United States, during an attempt to sell additional counterfeit currency to the undercover agent. Mosa waived extradition last year, pled guilty to conspiracy to distribute counterfeit currency on April 20, 2016, and is awaiting sentence. A U.S. - based co-conspirator, Mouafak Al Sabsabi, also was arrested in August 2014. Al Sabsabi pled guilty to conspiracy to distribute counterfeit currency and was sentenced principally to time served and a three year term of supervised release on May 31, 2016.
The investigation has revealed that Hussein and his co-defendants are members of a multinational criminal network engaged in the production and distribution of counterfeit U.S. currency. In conversations with the undercover agent and others, Hussein claimed to have access to as much as $800 million in high-quality counterfeit U.S. currency for sale to clients based in Iran and elsewhere, and offered to procure weapons, narcotics, and counterfeit currency and to have them shipped through U.S. ports.
“The reliability of U.S. currency is a pillar of the global financial system. As alleged, counterfeiters such as the defendant and his co-conspirators exploited that reliability and threatened the stability it provides, all to serve their own greed,” stated United States Attorney Capers. “This investigation sends the message around the world that counterfeiters, wherever located, can and will be brought to justice.” Mr. Capers extended his grateful appreciation to the New York Field Offices of the United States Secret Service and Federal Bureau of Investigation, to the Justice Department’s Office of International Affairs, and to the Royal Malaysian Police and Attorney General’s Chambers for their assistance in the investigation and in effecting the defendant’s extradition.
“This investigation highlights the immeasurable effectiveness of law enforcement partnerships in combatting fraud,” said Secret Service Special Agent in Charge Beach. “We will continue to work closely with our domestic and international partners to defeat criminal enterprises and protect the Nation’s financial infrastructure.”
“We are pleased that Louay Ibrahim Hussein was extradited and will now face the U.S. justice system for his role in a charged international counterfeit currency ring. As uncovered in a multi-year investigation with the U.S. Secret Service, we allege Hussein and his co-conspirators sold more than a half a million dollars of counterfeit U.S. currency with the help of sponsors in Lebanon and Iran. Additionally, Hussein claimed to have access to millions more. Counterfeit currency doesn’t just devalue authentic currency, it weakens markets and global economies,” stated Assistant Director-in-Charge Rodriguez of the FBI.
The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being handled by the Office’s National Security & Cybercrime Section. Assistant United States Attorneys Samuel P. Nitze and J. Matthew Haggans are in charge of the prosecution.
The Defendants:
LOUAY IBRAHIM HUSSEIN
Age: 42
LebanonNAZER AL SHEKH MOSA, a/k/a MohammEd HASAN HAIDAR
Age: 29
Damascus, SyriaMOUAFAK ALSABSABI, also known as “Abu Masen,”
Age: 68
Garden City, New YorkE.D.N.Y. Docket No. 14-M-732
E.D.N.Y. Docket No. 16-CR-117 (Defendant HAIDAR)
E.D.N.Y. Docket No. 14-CR-583 (Defendant ALSABSABI)MS-13 Members Indicted for Four Murders, Attempted Murder, Arson, Obstruction of Justice, and Firearms OffensesRead the Press Release
A 23-count indictment was unsealed today in United States District Court for the Eastern District of New York charging defendants Edwin Amaya-Sanchez, also known as “Strong, “William Castellanos, also known as “Dizzy” and “Satanico,” Jhonny Contreras, also known as “Reaper” and “Conejo,” and Reynaldo Lopez-Alvarado, also known as “Mente,” all of whom are all members of La Mara Salvatrucha, also known as the MS-13 (MS-13), with four murders, including the May 26 and 28, 2013 murders of Derrick Mayes and Keenan Russell, the July 14, 2014 murder of Jose Lainez-Murcia, the June 30, 2015 murder of Jonathan Cardona-Hernandez, and an April 9, 2013 attempted murder, as well as related firearms, accessory after the fact, obstruction of justice, and arson offenses.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Timothy D. Sini, Commissioner, Suffolk County Police Department (SCPD).
“The senseless and depraved violence reflected in the devastating loss of life allegedly at the hands of these defendants and their fellow gang members is a trademark of the MS-13. Whether it is random violence exemplified by the murders of Derrick Mayes and Keenan Russell, or the targeted executions of Jose Lainez-Murcia and Jonathan Cardona-Hernandez, the MS-13’s thirst for murder and mayhem is a threat to our communities who are affected by their brutal acts of violence,” stated United States Attorney Capers. “This Office and our law enforcement partners will continue our steadfast resolve to dismantle the MS-13 and keep our communities safe from gang violence.” Mr. Capers expressed his grateful appreciation to all the members of the FBI’s Long Island Gang Task Force.
“The history of MS-13 illustrates in vivid detail the gang simply has no regard for human life. As detailed in this case, these men allegedly killed random people they did not know, and actively targeted others. The FBI’s Long Island Gang Task Force works aggressively each day to track down anyone associated with the gang in the hope that we will stop their next random killing,” stated Assistant Director-in-Charge Rodriguez.
“This prosecution is an enormous victory for Suffolk County residents, and we thank the United States Attorney's Office and the FBI for their continued partnership. With this case, we continue to send the clear message to gang members in Suffolk County that the Suffolk County Police Department, along with our law enforcement partners, will bring you to justice for your heinous and depraved crimes. This is just the beginning of results that our renewed partnership with our federal law enforcement partners will reap for Suffolk County residents,” stated Commissioner Sini.
As detailed in the indictment and the government’s detention letter filed earlier today, Contreras is charged with the murders of Mayes and Russell, who were both killed in Central Islip over Memorial Day weekend in 2013. On May 26, 2013, Contreras and another MS-13 member armed themselves with a .25 caliber handgun and 20-gauge shotgun and drove around Central Islip in a stolen minivan looking for rival gang members to kill. While on Wilson Boulevard, Contreras and his co-conspirator observed Mayes, an African-American man, whom they did not know, but assumed to be a member of the Bloods street gang because he was wearing an article of red clothing. The MS-13 members approached Mayes, shot him multiple times, and killed him. On May 27-28, 2013, Contreras and several other MS-13 members, who were armed with the same .25 caliber handgun and 20-gauge shotgun, as well as a 9mm handgun, again drove around Central Islip in the stolen minivan and other vehicles, looking for rival gang members to kill, and observed several African-Americans, including Russell, outside a house party on Acorn Street. The MS-13 members approached Russell, who they again did not know, but assumed to be a member of the Bloods, opened fire with the weapons, and killed him. When the MS-13 members fled the scene in the minivan, they ran out of gas and called Lopez-Alvarado, who helped them get gas and hide the firearms. Later, the MS-13 members learned that the minivan had been linked to the murders and they agreed to destroy it. Contreras, Lopez-Alvarado and another MS-13 member wiped the minivan down to remove any fingerprints, drove it to a wooded area in Ronkonkoma, doused it with gas, and set it on fire. Shortly after participating in the Mayes and Russell murders, Contreras, who had been an MS-13 associate, was inducted as a member of the MS-13.
Amaya-Sanchez is indicted in connection with the July 14, 2014 murder of Lainez-Murcia, who was shot and killed while sitting in a car outside of his home on Twin Lawns Avenue in Brentwood. Amaya-Sanchez orchestrated the murder because he believed that Lainez-Murcia was an assassin who had killed MS-13 members in El Salvador. Amaya-Sanchez, who worked with Lainez-Murcia and knew where he lived, drove other MS-13 members, who were armed with two 9mm handguns, to Lainez-Murcia’s house and dropped them off. When Lainez-Murcia left the house and got into his car, the other MS-13 members approached and fired multiple times, killing Lainez-Murcia. The other MS-13 members ran down the block where Amaya-Sanchez picked them up and drove them away.
Further, the indictment charges Castellanos in connection with the June 30, 2015, murder of 16 year-old Cardona-Hernandez, whom the MS-13 members believed was associated with a rival gang. On the night of the murder, Castellanos and other MS-13 members drove Cardona-Hernandez to Nicoll Avenue in Central Islip, where they shot and killed him using two 9mm handguns.
Finally, Lopez-Alvarado is charged with an April 9, 2013 attempted murder of a man on Benton Place in Bay Shore. Lopez-Alvarado, who was a new member of the MS-13, and another MS-13 member went out looking to kill a rival gang member in order for Lopez-Alvarado to gain full status in the gang. When they observed a group of men who they assumed were members of the Bloods, Lopez-Alvarado and his co-conspirator retrieved the same .25 caliber handgun and 20-gauge shotgun used in the Mayes and Russell murders, drove back to Benton Place, approached the group of men and opened fire. One man was struck and was subsequently transported to a local hospital, where he was treated and survived the shooting.
This is the latest indictment in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York targeting members of the MS-13, a violent international criminal organization. The MS-13’s leadership is based in El Salvador and Honduras, but the gang has thousands of members across the United States, comprised primarily of immigrants from Central America. With numerous branches, or “cliques,” the MS-13 is the largest and most violent street gang on Long Island. Since 2003, hundreds of MS-13 members, including dozens of clique leaders, have been convicted on federal felony charges in the Eastern District of New York. A majority of those MS-13 members have been convicted on federal racketeering charges for participating in murders, attempted murders, and assaults. Since 2010 alone, this Office has obtained indictments charging MS-13 members with carrying out more than 30 murders in the Eastern District of New York, and has convicted dozens of MS-13 leaders and members in connection with those murders. These prosecutions are the product of investigations led by the FBI’s Long Island Gang Task Force, comprising agents and officers of the FBI, SCPD, Nassau County Police Department, Nassau County Sheriff’s Department, Suffolk County Probation, Suffolk County Sheriff’s Department, and Rockville Centre Police Department.
The defendants are scheduled to be arraigned this afternoon before United States District Judge Joseph F. Bianco at the federal courthouse in Central Islip. The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The government’s case is being handled by the Office’s Long Island Criminal Section. Assistant United States Attorneys John J. Durham, Paul G. Scotti, and Raymond A. Tierney are in charge of the prosecution.
The Defendants:
Edwin Amaya-Sanchez (“Strong”)
Age: 29
Brentwood, New YorkWilliam Castellanos (“Dizzy” and “Satanico”)
Age: 19
Central Islip, New YorkJhonny Contreras (“Reaper”)
Age: 22
Brentwood, New YorkReynaldo Lopez-Alvarado (“Mente”)
Age: 24
Brentwood, New YorkE.D.N.Y. Docket No. 16-403 (JMA/JFB)
Queens Father and Son Convicted at Trial for Their Participation in A Transnational Cocaine Trafficking OperationRead the Press Release
This afternoon, following a two week trial, a federal jury in Brooklyn, New York, returned a guilty verdict against Gregorio and Angelo Gigliotti for their operation of a transnational cocaine trafficking operation that stretched from Italy, to Queens and to Costa Rica. Gregorio Gigliotti was also convicted of possessing a stash of firearms in connection with the operation. When sentenced by United States District Judge Raymond J. Dearie, the defendants face a maximum sentence of life imprisonment. Gregorio Gigliotti faces a mandatory minimum sentence of 15 years in prison, and Angelo Gigliotti faces a mandatory minimum sentence of 20 years in prison.
The verdict was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Angel M. Melendez, Special Agent-in-Charge, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), New York; and Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office.
“This case serves as a powerful example of the impact of international cooperation in combatting criminal organizations whose activities transcend national borders,” stated United States Attorney Capers. Mr. Capers thanked our law enforcement partners in Italy, including the Prosecutor of the Republic of Reggio Calabria; the Italian National Police (INP), and in particular, the Squadra Mobile of Reggio Calabria and the Servizio Centrale Operativo; the Direzione Centrale per i Servizi Antidroga; and the Direzione Nazionale Antimafia, as well as our law enforcement partners in Costa Rica, including the Organismo de Investigacion Judicial. Mr. Capers also expressed his gratitude to the U.S. Department of Justice Attaché and the Offices of the HSI and FBI Legal Attaché at the U.S. Embassy in Rome, as well as the FBI Legal Attaché at the U.S. Embassy in Panama City, who coordinated extensive evidence-sharing and coordinated operations. Mr. Capers also thanked the New York City Police Department and the Drug Enforcement Administration for their assistance in this matter.
“This family run business served more than just pizza to its customers, using store fronts like a pizzeria to import large amounts of cocaine,” said HSI New York Special Agent-in-Charge Melendez. “Like father like son, both of these defendants will likely be spending the next several years in jail.”
“This case has sentiments of the famous Pizza Connection case- an organized crime family running a narcotics trafficking ring fronted from a family restaurant in New York. Today’s guilty verdict matches the past. We are pleased to say that another organized crime enterprise’s attempt at evading law enforcement has been disrupted. We thank our law enforcement partners here, in Italy and Costa Rica for their continued cooperation,” stated FBI Assistant Director-in-Charge Rodriguez.
Evidence presented at trial - including court-authorized wiretaps and physical surveillance - revealed that Gregorio Gigliotti, together with his wife, owned and operated several businesses in New York City that were used to facilitate their narcotics-trafficking operation, including Cucino Amodo Mio, an Italian restaurant and pizzeria in Corona, Queens, and Fresh Farm Produce Export Corp., an import company. Their son, Angelo Gigliotti, played the role of Gregorio’s trusted assistant, including handling the drug trafficking operation when Gregorio was out of the country. In October 2014, law enforcement intercepted a shipment of cassava (a starchy root also referred to as yucca) that was shipped to the United States from Costa Rica and bound for Fresh Farm Produce Export Corp. in New York. The shipment was found to contain approximately 40 kilograms of cocaine secreted inside cardboard boxes of cassava. Earlier, Gigliotti’s wife traveled to Costa Rica with more than $360,000 in cash that she delivered to the sources of supply. In September 2014, Franco Fazio, a relative and Italian national, traveled from Italy to New York and then to Costa Rica to deliver another $170,000 in cash to the sources of supply.
In December 2014, law enforcement intercepted a second shipment of cassava bound for Fresh Farm Produce Export Corp. in New York that had also been shipped from Costa Rica and seized approximately 15 kilograms of cocaine secreted within the cardboard boxes of the produce. Prior to the arrival of this shipment of cocaine, Fazio had made two additional trips to Costa Rica to meet with the sources of supply.
The Gigliotti defendants were arrested on March 11, 2015, in New York. That same day, law enforcement searched Cucino Amodo Mio as well as Gregorio and his wife’s residence. In the restaurant they seized one 12 gauge shotgun, one loaded .357 magnum Trooper revolver, one loaded .22 caliber Colt pistol, one.38 caliber Charter Arms revolver, one 9 mm Keltec pistol, one .762 Czech pistol, one .38 caliber Derringer that had a defaced serial number, ammunition magazines, loose ammunition, two handgun holsters, brass knuckles, more than $100,000 in cash, and a drug ledger detailing the disbursement of money made on the sale of narcotics. In the Gigliotti residence, agents recovered a loaded handgun and more than $18,000 in cash.
The charges in the indictment against co-defendants Eleonora Gigliotti and Franco Fazio remain pending. These charges are merely allegations, and these defendants are presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Margaret E. Gandy and Keith D. Edelman are in charge of the prosecution.
The Defendants:
GREGORIO GIGLIOTTI
Age: 60
Queens, New YorkANGELO GIGLIOTTI
Age: 36
Queens, New York
E.D.N.Y. Docket No. 15-CR-204 (S-2) (RJD)Leader of Violent Gang Sentenced to Life in Prison for Racketeering and MurderRead the Press Release
Anthony Christian was sentenced today to life in prison by United States District Judge Eric N. Vitaliano at the federal courthouse in Brooklyn. Christian was convicted at trial in October 2014 on charges of racketeering – including the murder of Jerome Estella and three murder conspiracies as racketeering acts – as well as firearms possession and multiple counts based on his trafficking in crack cocaine. The defendant faced a mandatory life sentence for his role in the Estella murder. The charges arose out of the defendant’s long-time dominance of a drug crew that operated in the Park Hill housing complex in the Clifton neighborhood of Staten Island.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Diego G. Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).
As proven at trial, Anthony Christian, also known as “Nitty,” and his brother Harvey Christian led a violent narcotics distribution ring in Park Hill from 1991 to 2011. In the mid-1990s, the Christian brothers and their associates sought to take control of more drug territory within Park Hill. To achieve this, they engaged in massive gun battles for months. During one of the battles, in May 1995, law enforcement recovered 77 shell casings inside a residential building, outside on the street, and on the roof. In 1999, Anthony Christian ordered another member of the enterprise to murder a rival drug dealer named Corey Brooker. In the course of looking for Brooker, the enterprise member had a dispute with Brooker’s associate, Jerome Estella. Anthony Christian then authorized the other enterprise member to murder Estella, and provided him with the 9 millimeter handgun he used to carry out the murder.
In the year before the Christian brothers’ arrests in 2011, multiple search warrants and arrests related to members of the organization and their associates were executed in and around Park Hill and elsewhere in New York. These searches and arrests resulted in the seizure of firearms and ammunition, including a Mac-11 pistol, as well as large quantities of crack and powder cocaine. During a search of the Christian brothers’ apartment in the Park Hill housing complex in February 2010, the New York City Police Department (NYPD) recovered multiple bullet-proof vests, crack-cocaine, and marijuana.
Harvey Christian, who was also convicted of all counts at trial in October 2014, faces a mandatory minimum 40-year prison term and is awaiting sentencing.
Mr. Capers extended his grateful appreciation to the FBI, the NYPD, and the Richmond County District Attorney’s Office.
The government’s case is being prosecuted by Assistant United States Attorneys Allon Lifshitz, Richard M. Tucker, and Kevin Trowel.
The Defendant:
ANTHONY CHRISTIAN
Age: 43
Staten Island, New YorkE.D.N.Y. Docket No. 11-CR-425
Alleged Member of Violent Robbery Crew Charged with Firearm-Related MurderRead the Press Release
Earlier today, Nestor Marcelino Delacruz Santana (Delacruz) was arraigned on an indictment before United States District Judge Nicholas G. Garaufis in Brooklyn federal court. Delacruz is charged with the 2003 firearm-related homicide of Francisco De Orbe.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York Division. The investigation was led by the DEA’s New York Drug Enforcement Task Force comprising agents and officers from the DEA, New York City Police Department, and the New York State Police.
As detailed in the indictment and other court filings by the government, Delacruz was an associate of a violent New York-based robbery crew that operated in Philadelphia and elsewhere. The crew targeted drug dealers who had access to large sums of narcotics and drug proceeds. Crew members would kidnap their intended victims and torture them until they disclosed the location of their drugs and cash, which the crew then stole.
On or about May 9, 2003, in Frankford, Pennsylvania, a suburb of Philadelphia, Delacruz and other crew members kidnapped and tortured De Orbe until he revealed the location of his drugs and cash. The crew then stole several thousand dollars in cash and more than a kilogram of cocaine from De Orbe.
Having predetermined that De Orbe would be killed after he was robbed, at Delacruz’s direction one of his co-conspirators injected De Orbe with an overdose of heroin. When that failed to kill De Orbe, he was shot in the neck, and his body was discarded.
“As charged in the indictment, Delacruz was a member of a vicious robbery crew that hunted down and murdered its victims for drugs and money,” stated United States Attorney Capers. “Law enforcement pursued him for nearly a decade, demonstrating our commitment to ridding the streets of our communities from the scourge of drug trafficking and its related violence.”
DEA Special Agent-in-Charge Hunt stated, “A little more than a kilogram of cocaine and thousands of dollars was the price Delacruz put on his victim’s head. This historical investigation brought a brutal killer to justice after 13 years on the lam. I commend the men and women of the New York Drug Enforcement Task Force for their dutiful commitment to this investigation.”
“The NYPD will continue to investigate and arrest those who carry out this type of brazen violence that threatens the public safety,” said NYPD Police Commissioner Bratton. “With the hard work of the U.S. Attorney’s Office for the Eastern District of New York and the Drug Enforcement Task Force, we will continue to root out organized drug trafficking and the inevitable violence that follows.”
NYSP Superintendent Beach stated, “The work of the New York Drug Enforcement Task Force and our partners has resulted in a dangerous man being taken off the streets. This man and his associates are a prime example of the dangerous crimes that are associated with drug trafficking. State Police and our partners will continue to work together to rid our communities of these dangerous substances, and the violence that comes with them.”
The charges in the indictment are merely allegations, and Delacruz is presumed innocent unless and until proven guilty. If convicted, he faces a maximum penalty of life imprisonment, or possibly the death penalty.
The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section. Assistant United States Attorneys Julia Nestor and Craig R. Heeren are in charge of the prosecution.
The Defendant:
NESTOR MARCELINO DELACRUZ SANTANA
Philadelphia, Pennsylvania
Age: 44EDNY Docket No. 16-CR-337
Russian Agent Sentenced to 10 Years for Acting as Unregistered Russian Government Agent and Leading Scheme to Illegally Export Controlled Technology to Russian MilitaryRead the Press Release
Alexander Fishenko, a dual citizen of the United States and Russia, was sentenced today to 10 years in prison and ordered to forfeit more than $500,000 in criminal proceeds following his guilty plea on Sept. 9, 2015 to a 19-count indictment. Fishenko pleaded guilty to acting as an agent of the Russian government within the United States without prior notification to the Attorney General, conspiring to export and illegally exporting controlled microelectronics to Russia, conspiring to launder money and obstruction of justice.
The sentence was announced by Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Robert L. Capers of the Eastern District of New York.
Fishenko, 10 other individuals and two corporations – ARC Electronics Inc. (ARC) and Apex System LLC (Apex) – were indicted in October 2012. Five defendants previously pleaded guilty, three individuals were convicted in October 2015 after trial and three individuals remain at large. ARC is now defunct and Apex, a Russian-based procurement firm, failed to appear in court.
“Alexander Fishenko illegally shipped millions of dollars of high-technology products to Russian military affiliated actors in clear violation of United States law,” said Assistant Attorney General Carlin. “Export laws exist as an important part of our national security framework and protecting national assets from ending up in the hands of our potential adversaries is one of our highest priorities.”
“U.S. export laws exist to check the proliferation overseas of dangerous military technologies but Fishenko, while working illegally as an agent of the Russian government, flouted these laws in order to line his pockets,” stated U.S. Attorney Capers. “Today’s sentence sends a powerful message of deterrence to others, who like Fishenko and his co-conspirators, would be willing to sacrifice the national security of the United States for their personal financial gain.”
In 1998, Fishenko founded ARC and also served as an executive of Apex. Between approximately October 2008 and October 2012, Fishenko led a conspiracy to obtain advanced, technologically cutting-edge microelectronics from manufacturers and suppliers located within the United States and to export those high-tech goods to in Russia while evading the government licensing system set up to control such exports. These commodities have applications and are frequently used in a wide range of military systems, including radar and surveillance systems, missile guidance systems and detonation triggers. Russia does not domestically produce many of these sophisticated goods. Between 2002 and 2012, ARC shipped approximately $50 million worth of microelectronics and other technologies to Russia. ARC’s largest clients – including Apex subsidiaries – were certified suppliers of military equipment for the Russian Ministry of Defense.
To induce manufacturers and suppliers to sell these high-tech goods to ARC and to evade applicable export controls, Fishenko and his co-conspirators provided false end-user information in connection with the purchase of the goods, concealed the fact that they were exporters and falsely classified the exported goods on export records submitted to the Department of Commerce.
Ultimate recipients of ARC’s products included a research unit for the Russian FSB internal security agency, a Russian entity that builds air and missile defense systems and another that produces electronic warfare systems for the Russian Ministry of Defense.
Today’s sentencing took place before Senior U.S. District Judge Sterling Johnson Jr. of the Eastern District of New York.
Assistant Attorney General Carlin joined U.S. Attorney Capers in extending his grateful appreciation to the FBI’s Houston Field Office and the Department of Commerce for their leading roles in the investigation.
The government’s case is being handled by the U.S. Attorney’s Office’s National Security & Cybercrime Section. The case is being prosecuted by Assistant U.S. Attorneys Richard M. Tucker and Una A. Dean of the Eastern District of New York and Trial Attorney David Recker of the National Security Division’s Counterintelligence and Export Control Section. Assistant U.S. Attorney Claire Kedeshian of the Eastern District of New York is handling the forfeiture aspects of the case.
Russian Agent Sentenced to 10 Years for Acting as an Unregistered Agent of the Russian Government and Leading Scheme to Illegally Export Controlled Technology to the Russian MilitaryRead the Press Release
Earlier today, Alexander Fishenko, a dual citizen of the United States and Russia, was sentenced to 120 months’ imprisonment and ordered to forfeit more than $500,000 in criminal proceeds following his guilty plea on September 9, 2015 to a nineteen-count indictment. Fishenko was charged with acting as an agent of the Russian government within the United States without prior notification to the Attorney General, conspiring to export, and illegally exporting, controlled microelectronics to Russia, conspiring to launder money, and obstruction of justice.
Fishenko, ten other individuals, and two corporations – ARC Electronics, Inc. (ARC) and Apex System, L.L.C. (Apex) – were indicted in October 2012. Five individual defendants previously pleaded guilty, three individuals were convicted in October 2015 after trial, and three remain at large. ARC is now defunct, and Apex, a Russian-based procurement firm, failed to appear in court.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and John P. Carlin, Assistant Attorney General for National Security.
“U.S. export laws exist to check the proliferation overseas of dangerous military technologies, but Fishenko, while working illegally as an agent of the Russian government, flouted these laws in order to line his pockets,” stated United States Attorney Capers. “Today’s sentence sends a powerful message of deterrence to others, who like Fishenko and his co-conspirators, would be willing to sacrifice the national security of the United States for their personal financial gain.” Mr. Capers extended his grateful appreciation to the Federal Bureau of Investigation, Houston Field Office and the Department of Commerce for their leading roles in the investigation.
“Alexander Fishenko illegally shipped millions of dollars of high-technology products to Russian military affiliated actors in clear violation of United States law,” said Assistant Attorney General Carlin. “Export laws exist as an important part of our national security framework and protecting national assets from ending up in the hands of our potential adversaries is one of our highest priorities.”
In 1998, Fishenko founded ARC, and he also served as an executive of Apex. Between approximately October 2008 and October 2012, Fishenko led the conspiracy to obtain advanced, technologically cutting-edge microelectronics from manufacturers and suppliers located within the United States and to export those high-tech goods to in Russia, while evading the government licensing system set up to control such exports. These commodities have applications and are frequently used in a wide range of military systems, including radar and surveillance systems, missile guidance systems, and detonation triggers. Russia does not produce many of these sophisticated goods domestically. Between 2002 and 2012, ARC shipped approximately $50,000,000 worth of microelectronics and other technologies to Russia. ARC’s largest clients – including Apex subsidiaries – were certified suppliers of military equipment for the Russian Ministry of Defense.
To induce manufacturers and suppliers to sell these high-tech goods to ARC, and to evade applicable export controls, Fishenko and his co-conspirators provided false end user information in connection with the purchase of the goods, concealed the fact that they were exporters, and falsely classified the goods they exported on export records submitted to the Department of Commerce.
Ultimate recipients of ARC’s products included a research unit for the Russian FSB internal security agency, a Russian entity that builds air and missile defense systems and another that produces electronic warfare systems for the Russian Ministry of Defense.
Today’s sentencing took place before United States District Senior Judge Sterling Johnson, Jr.
The government’s case is being handled by the Office’s National Security & Cybercrime Section. Assistant United States Attorneys Richard M. Tucker and Una A. Dean, as well as Trial Attorney David Recker from the Department of Justice’s Counterintelligence and Export Control Section, are in charge of the prosecution. Assistant United States Attorney Claire Kedeshian is handling the forfeiture aspects of the case.
The Defendant:
ALEXANDER FISHENKO
Age: 50
Houston, TexasE.D.N.Y. Docket No. 12 CR 626 (SJ)
Global Head of HSBC’s Foreign Exchange Cash-Trading Desks Arrested for Orchestrating Multimillion-Dollar Front Running SchemeRead the Press Release
Charges Also Unsealed Against Former Head of Foreign Exchange Cash-Trading Desk
for Europe, Middle East and AfricaThe head of global foreign exchange cash trading at HSBC Bank plc, a subsidiary of HSBC Holdings plc (collectively HSBC), and HSBC’s former head of foreign exchange cash trading for Europe, the Middle East and Africa were charged with conspiring to defraud a client of HSBC through a scheme commonly referred to as “front running.”
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Robert L. Capers of the Eastern District of New York, Acting Inspector General Frederick W. Gibson of the Federal Deposit Insurance Corporation (FDIC) and Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office made the announcement.
Mark Johnson, 50, a U.K. citizen and U.K. and U.S. resident, and Stuart Scott, 43, a U.K. citizen and resident, were charged by complaint with conspiracy to commit wire fraud. Johnson was arrested last night at JFK International Airport in Queens, New York, and will be arraigned later today before U.S. Magistrate Judge Lois Bloom of the Eastern District of New York.
“The defendants allegedly betrayed their client’s confidence, and corruptly manipulated the foreign exchange market to benefit themselves and their bank,” said Assistant Attorney General Caldwell. “This case demonstrates the Criminal Division’s commitment to hold corporate executives, including at the world’s largest and most sophisticated institutions, responsible for their crimes.”
“As alleged, the defendants placed personal and company profits ahead of their duties of trust and confidentiality owed to their client, and in doing so, defrauded their client of millions of dollars,” said U.S. Attorney Capers. “When questioned by their client about the higher price paid for their significant transaction, the defendants wove a web of lies designed to conceal the truth and divert attention away from their fraudulent trades. The charges and arrest announced today reflect our steadfast commitment to hold accountable corporate executives and licensed professionals who use their positions to fraudulently enrich themselves.”
“The Federal Deposit Insurance Corporation Office of Inspector General is pleased to join the Department of Justice and our law enforcement colleagues in announcing this arrest,” said Acting Inspector General Gibson. “Our collective efforts help ensure public confidence in the financial markets. It is critically important to hold individuals accountable for their actions, particularly those who abuse their positions of public trust. We will continue to pursue justice for those involved as this case moves forward.
“These individuals are accused of defrauding clients by misusing confidential information to manipulate currency prices for the benefit of the bank and themselves,” said Assistant Director in Charge Abbate. “The FBI will continue to work aggressively with our partners to prevent, investigate and prosecute criminal fraud in the financial markets.”
According to the complaint, in November and December 2011, Johnson and Scott misused information provided to them by a client that hired HSBC to execute a foreign exchange transaction related to a planned sale of one of the client’s foreign subsidiaries. HSBC was selected to execute the foreign exchange transaction – which was going to require converting approximately $3.5 billion in sales proceeds into British Pound Sterling – in October 2011. HSBC’s agreement with the client required the bank to keep the details of the client’s planned transaction confidential. Instead, Johnson and Scott allegedly misused confidential information they received about the client’s transaction. On multiple occasions, Johnson and Scott allegedly purchased Pound Sterling for HSBC’s “proprietary” accounts, which they held until the client’s planned transaction was executed. The complaint alleges that, as part of the scheme, both Johnson and Scott made misrepresentations to the client about the planned foreign exchange transaction that concealed the self-serving nature of their actions. Specifically, the complaint alleges that Johnson and Scott caused the $3.5 billion foreign exchange transaction to be executed in a manner that was designed to spike the price of the Pound Sterling, to the benefit of HSBC and at the expense of their client. In total, HSBC allegedly generated profits of roughly $8 million from its execution of the FX Transaction for the Victim Company, including profits generated from the front running conduct by Johnson, Scott, and other traders whom they directed.
The investigation is being conducted by the FDIC’s Office of Inspector General and the FBI’s Washington Field Office. Trial Attorney Melissa Aoyagi and Senior Litigation Counsel Carol Sipperly of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Jacquelyn Kasulis of the Eastern District of New York’s Business and Securities Fraud Section are prosecuting the case.
The charges in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The charges in this case were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
Global Head of HSBC’S Foreign Exchange Cash-Trading Desks Arrested for Orchestrating Multimillion-Dollar Front Running SchemeRead the Press Release
BROOKLYN, N.Y. – The head of global foreign exchange cash trading at HSBC Bank plc, a subsidiary of HSBC Holdings plc (collectively HSBC), and HSBC’s former head of foreign exchange cash trading for Europe, the Middle East and Africa, were charged with conspiring to defraud a client of HSBC through a scheme commonly referred to as “front running.”
U.S. Attorney Robert L. Capers of the Eastern District of New York, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting Inspector General Frederick W. Gibson of the Federal Deposit Insurance Corporation (FDIC), and Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office, made the announcement.
Mark Johnson, 50, a U.K. citizen and U.K. and U.S. resident, and Stuart Scott, 43, a U.K. citizen and resident, were charged by complaint with conspiracy to commit wire fraud. Johnson was arrested last night at JFK International Airport in Queens, New York, and will be arraigned later today before U.S. Magistrate Judge Lois Bloom of the Eastern District of New York.
“As alleged, the defendants placed personal and company profits ahead of their duties of trust and confidentiality owed to their client, and in doing so, defrauded their client of millions of dollars,” stated United States Attorney Capers. “When questioned by their client about the higher price paid for their significant transaction, the defendants wove a web of lies designed to conceal the truth and divert attention away from their fraudulent trades. The charges and arrest announced today reflect our steadfast commitment to hold accountable corporate executives and licensed professionals who use their positions to fraudulently enrich themselves.”
“The defendants allegedly betrayed their client’s confidence, and corruptly manipulated the foreign exchange market to benefit themselves and their bank,” said Assistant Attorney General Caldwell. “This case demonstrates the Criminal Division’s commitment to hold corporate executives, including at the world’s largest and most sophisticated institutions, responsible for their crimes.”
“The Federal Deposit Insurance Corporation Office of Inspector General is pleased to join the Department of Justice and our law enforcement colleagues in announcing this arrest,” said FDIC Acting Inspector General Gibson. “Our collective efforts help ensure public confidence in the financial markets. It is critically important to hold individuals accountable for their actions, particularly those who abuse their positions of public trust. We will continue to pursue justice for those involved as this case moves forward.”
“These individuals are accused of defrauding clients by misusing confidential information to manipulate currency prices for the benefit of the bank and themselves,” said Assistant Director in Charge Abbate. “The FBI will continue to work aggressively with our partners to prevent, investigate and prosecute criminal fraud in the financial markets.”
According to the complaint, in November and December 2011, Johnson and Scott misused information provided to them by a client that hired HSBC to execute a foreign exchange transaction related to a planned sale of one of the client’s foreign subsidiaries. HSBC was selected to execute the foreign exchange transaction – which was going to require converting approximately $3.5 billion in sales proceeds into British Pound Sterling – in October 2011. HSBC’s agreement with the client required the bank to keep the details of the client’s planned transaction confidential. Instead, Johnson and Scott allegedly misused confidential information they received about the client’s transaction. On multiple occasions, Johnson and Scott allegedly purchased Pound Sterling for HSBC’s “proprietary” accounts, which they held until the client’s planned transaction was executed. The complaint alleges that, as part of the scheme, both Johnson and Scott made misrepresentations to the client about the planned foreign exchange transaction that concealed the self-serving nature of their actions. Specifically, the complaint alleges that Johnson and Scott caused the $3.5 billion foreign exchange transaction to be executed in a manner that was designed to spike the price of the Pound Sterling, to the benefit of HSBC and at the expense of their client. In total, HSBC allegedly generated profits of roughly $8,000,000 from its execution of the FX Transaction for the Victim Company, including profits generated from the front running conduct by Johnson, Scott, and other traders whom they directed.
* * *
The investigation is being conducted by the FDIC’s Office of Inspector General and the FBI’s Washington Field Office. Trial Attorney Melissa Aoyagi and Senior Litigation Counsel Carol Sipperly of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Jacquelyn Kasulis of the Eastern District of New York’s Business and Securities Fraud Section are prosecuting the case.
The charges in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
* * *
The charges in this case were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
Former Executive Director and Two Co-Defendants Indicted for Embezzling and Laundering Hundreds of Thousands of Dollars from CharityRead the Press Release
On Friday, July 15, 2016, a federal grand jury in Brooklyn returned a seven-count indictment charging Wafa Abboud, the former executive director of a charity that provides services to individuals with developmental disabilities, and Marcelle P. Bailey and Rami Misbah Taha, with embezzling and laundering hundreds of thousands of dollars from that charity for Abboud’s personal use. The defendants were also charged with bank fraud in connection with Abboud’s purchase of her residence in Merrick, New York.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Eric Schneiderman, New York State Attorney General; and Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office.
As is alleged in the federal indictment, between January 2011 and her termination in May 2016, Abboud served as the Executive Director of Human First, Inc. (Human First), a not-for-profit social services provider based in Nassau County, New York, that provided services to children and young adults with autism and other development disabilities throughout the metropolitan New York City area.
The government’s investigation revealed that, during the relevant period, Abboud directed Human First to pay approximately $900,000 in purported consulting fees to a company controlled by her co-defendant, Bailey. Abboud, in turn, used hundreds of thousands of dollars of these funds to pay her personal expenses, including more than $114,000 in personal credit card debt, which included charges for cosmetic surgery, family vacations, jewelry, meals, and spa treatments. She also used the funds to pay property taxes on her Merrick residence and to make large international wire transfers.
In December 2014, Abboud purchased the Merrick residence for $1.3 million, making a down payment of $340,000. In the months prior to that purchase, she authorized hundreds of thousands of dollars in payments from Human First to companies controlled by her co-defendant Taha, payments that were purportedly for renovation work being performed on Human First owned properties. Instead, those funds were re-routed to Abboud and used to fund the down payment on her residence. Similarly, between April and December 2015, Abboud directed Human First to pay more than $400,000 to Taha-controlled entities, the vast majority of which were then transferred to a construction company as a payment for renovations on Abboud’s residence.
Abboud, Bailey, and Taha are also charged with conspiracy to commit bank fraud in connection with false statements they made to secure the $1 million mortgage on Abboud’s residence.
United States Attorney Capers stated, “Embezzlement of public funds meant to aid individuals with developmental disabilities impacts some of the most vulnerable members of our community. With this indictment, we serve notice that those who engage in such crimes will be vigorously investigated and held to account.” Mr. Capers extended his grateful appreciation to the New York State Office of the Inspector General for its assistance.
“The crimes alleged by state and federal prosecutors are troubling, particularly because they involve funds intended to benefit the developmentally disabled community,” said Attorney General Schneiderman. “When individuals embezzle funds intended for a charitable purpose it undermines the mission of the charity and harms all donors and honest non-profit organizations.”
“As alleged, Wafa Abboud embezzled and laundered hundreds of thousands of dollars from a charity she was entrusted to run over a time period of five years. Abboud used co-conspirators to help her steal funds that were intended to help children with disabilities; instead the funds were used to finance a lavish lifestyle. Corruption is corruption wherever it exists. The FBI is committed to investigating and rooting it out, whether it happens in a public office or a nonprofit organization,” stated FBI Assistant Director-in-Charge Rodriguez.
The charges announced today are merely allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted of the embezzlement charges, the defendants face a maximum sentence of 10 years’ imprisonment. If convicted of conspiracy to embezzle public funds, the defendants face a maximum sentence of five years’ imprisonment. If convicted of bank fraud or conspiracy to commit bank fraud, the defendants face a maximum sentence of 30 years. If convicted of conducting an unlawful monetary transaction over $10,000, the defendants Abboud and Taha face a maximum sentence of 10 years.
The government’s case is being prosecuted by the Office’s Public Integrity Section. Assistant United States Attorneys Robert Polemeni and Nathan Reilly, along with Special Assistant United States Attorney John Chiara (Special Counsel, Office of the New York State Attorney General) are in charge of the prosecution.
The Defendants:
WAFA ABBOUD
Age: 48
Merrick, New YorkMARCELLE P. BAILEY
Age: 49
Floral Park, New YorkRAMI MISBAH TAHA
Age: 39
Bronx, New YorkE.D.N.Y. Docket No. 16-CR-396
Former Broker and Bookkeeper in Agape Ponzi Scheme Sentenced to 78 Months’ ImprisonmentRead the Press Release
Earlier today, at the United States District Court in Central Islip, New York, the Hon. Denis R. Hurley sentenced Diane Kaylor, a former broker and bookkeeper of Agape World, Inc. (Agape), to 78 months’ imprisonment and ordered that she pay approximately $179 million in restitution following her convictions on April 21, 2015, after a four-week jury trial, for securities fraud, conspiracy, mail fraud, and wire fraud. These convictions arose out of the Kaylor’s participation in a Ponzi scheme, in which she took $3.6 million in commission payouts for herself, which she spent on home improvements, luxury automobiles, exotic vacations, and other items.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Philip R. Bartlett, Inspector-in-Charge, United States Postal Inspection Service (USPIS).
“For more than three years, Diane Kaylor and her co-defendants sold lies to thousands of unsuspecting investors,” stated United States Attorney Capers. “Victim investors have been saddled with huge debts, some lost their life’s savings, their retirements have been delayed, and their children have been saddled with unforeseen student loan payments. Kaylor has now been held to account for her role in these crimes.” Mr. Capers expressed his grateful appreciation to the FBI and USPIS, the agencies that led the government’s investigation, and thanked the United States Securities and Exchange Commission for its assistance in the case.
Nicholas Cosmo founded Agape in August 2000, following 21 months in a federal prison for defrauding investors. Between October 2005 and January 2009, Kaylor played a critical role in the scheme, soliciting and obtaining tens of millions of dollars from investors. To induce investments and discourage withdrawals, she misled investors by assuring them that their money would only be used to fund specific, short-term secured bridge loans to commercial borrowers, or to make short-term loans to small businesses, promising to pay investors unusually high rates of returns and representing that investing in Agape carried little or no risk of loss. As a result of these inducements, Kaylor actually raised significantly more money than was needed for the loans, and for her efforts she made approximately $3.6 million.
Kaylor and her co-conspirators paid returns to Agape investors, not from any profits earned on investments, but rather from existing investors’ deposits or money paid by new investors. They then took more than $370 million – approximately $55 million of which came from investors that Kaylor or her sub-brokers convinced to invest in the Ponzi scheme – from approximately 5,000 investors. Of that $370 million, only $22 million actually went to fund bridge loans. Approximately $113 million of investors’ money was used to trade high risk futures and commodities, over $80 million of which was lost in these markets.
As the fraudulent scheme began to unravel, Kaylor continued to deceive investors about Agape’s financial health. On November 3, 2008, Kaylor learned that all of Agape’s 2007 bridge loans were in default or on extension, but did not disclose this information to existing or new investors. Instead, she continued to solicit money from investors. Ultimately, approximately 3,800 investors sustained actual losses totaling more than $150 million.
On October 14, 2011, Cosmo, following his guilty plea, was sentenced to a term of imprisonment of 25 years for his role in the scheme; on February 24, 2016, following his convictions after the same four-week jury trial as Kaylor, Jason Keryc, a broker at Agape, was sentenced to a term of imprisonment of nine years for his role in the scheme; and on April 22, 2016, following his guilty plea, Anthony Ciccone, who was also a broker at Agape, was sentenced to a term of imprisonment of seven years for his role in the scheme. In addition to the convictions of Cosmo, Kaylor, Keryc, and Ciccone, the government’s investigation led to the conviction of five other defendants in the scheme, who are awaiting sentencing before Judge Hurley.
The government’s case is being handled by the Office’s Long Island Criminal and Civil Sections. Assistant United States Attorneys Christopher C. Caffarone, Bradley T. King, Grace M. Cucchissi, and Vincent Lipari are in charge of the prosecution.
The Defendant:
DIANE KAYLOR
Age: 40
Bethpage, New YorkE.D.N.Y. Docket No. 12-CR-357 (S-4)(DRH)
New York City Police Officer Pleads Guilty to Sexual Exploitation of Children and Receipt of Child PornographyRead the Press Release
Earlier today, Alberto Randazzo, a Sergeant with the New York City Police Department (NYPD), pleaded guilty to two counts of conspiracy to sexually exploit a child and one count of receipt of child pornography. Today’s plea took place before United States District Judge Pamela K. Chen at the federal courthouse in Brooklyn, New York. At sentencing, Randazzo faces a mandatory minimum sentence of 15 years and a maximum of 30 years in prison on each of the top counts.
The plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Angel M. Melendez, Special Agent-in-Charge, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), New York, and William J. Bratton, Commissioner, New York City Police Department (NYPD).
According to previous court filings and statements made during the plea proceedings, from as early as 2010 through 2013, Randazzo targeted mothers through websites such as Ashley Madison and Match.com and persuaded them to sexually abuse their children so he could view it. Randazzo was caught in February 2013, when a witness found disturbing text messages on Randazzo’s phone and uncovered emails from women sending Randazzo pictures of them molesting their children. When the witness confronted him, Randazzo admitted his sexual interest in mothers having sex with their children.
Based on the information obtained from the witness and the photographs, the Internal Affairs Bureau (IAB) of the NYPD obtained a search warrant for Randazzo’s apartment and found numerous images and videos of child pornography, including a number of videos of child pornography that were created by Randazzo himself. Randazzo was arrested and charged in Queens Criminal Court. At the time of his arrest, Randazzo had been a member of the NYPD for 15 years. While on bail in connection with that case, Randazzo was discovered by Special Agents of HSI to be downloading child pornography, which led to the federal investigation and federal charges being filed.
In announcing the guilty plea, Mr. Capers praised the joint investigative efforts of HSI and the NYPD.
The government’s case is being prosecuted by Assistant United States Attorneys Tyler Smith and Moira Kim Penza.
The Defendant:
ALBERTO RANDAZZO
Age: 39
Astoria, New YorkE.D.N.Y. Docket No. 14-CR-189 (PKC)
Member of Brooklyn Street Gang Arrested and Charged with Racketeering, Double Homicide, Narcotics Trafficking and Unlawful Use of FirearmsRead the Press Release
A five-count indictment was unsealed today in United States District Court for the Eastern District of New York charging Frank Smith, a member of a Coney Island-based gang known variously as “Rival Impact,” “R.I.,” “Mermaids,” “Mermaid Boys,” and “33rd Street Crew,” with crimes including racketeering, murder in aid of racketeering, narcotics trafficking and unlawful use of firearms. The defendant was arraigned this afternoon before United States Magistrate Judge Lois Bloom at the federal courthouse in Brooklyn.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); and William J. Bratton, Commissioner, New York City Police Department (NYPD).
As detailed in the indictment, between January 2001 and October 2014, to maintain Rival Impact’s power and hold in the Coney Island section of Brooklyn, the defendant and his gang engaged in widespread narcotics distribution and violence, including the October 4, 2010 murders of Terrance Serrano and Rashawn Washington, in addition to various attempted murders, robberies, assaults and intimidation. Serrano and Washington, who were members of a rival gang known as “Thirty-O,” were shot and killed while sitting in their car after leaving a nightclub in Manhattan.
“As alleged, for years the defendant and other members of this violent Brooklyn street gang have plagued neighborhoods throughout Coney Island and elsewhere with drugs and violence. Today’s charges send the clear message that violence by and among street gangs will not be tolerated. We will use all available resources to hold accountable those who endanger the lives and well-being of the residents of our communities,” stated United States Attorney Capers.
“Street gangs have an impact on the communities in which they operate. They spread fear and violence so they can control their so called turf; and for them murder just comes with the territory. But the FBI and our law enforcement partners won’t accept any crime as a new normal, and we won’t stop pursuing gang members,” said FBI Assistant Director-in-Charge Rodriguez.
“We are hopeful that today’s indictment is a milestone along the path to this individual’s conviction,” said NYPD Commissioner Bratton. “The defendant, as alleged, terrorized Coney Island and other parts of the City by selling illegal narcotics, murdering members of a rival gang and using violence and intimidation to achieve his criminal objectives.”
The charges are merely allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted of the charges in the indictment, Smith faces a maximum sentence of life imprisonment.
The government’s case is being prosecuted by the Office’s Organized Crime and Gangs Section. Assistant United States Attorney Maria Cruz Melendez is in charge of the prosecution.
The Defendant:
FRANK SMITH
Age: 31
Staten Island, New YorkEDNY Docket No. 16-CR-346
Brooklyn Man Pleads Guilty to Facilitating $6 Million Food Stamp Fraud in New YorkRead the Press Release
Earlier today, Fowzi Naji Tareb pled guilty at the federal courthouse in Brooklyn, New York, to defrauding the United States Department of Agriculture in connection with its Supplemental Nutrition Assistance Program (SNAP), previously known as the Food Stamp Program. Tareb was arrested after providing numerous retail businesses in the New York area with the machinery to accept SNAP benefits even though they were not authorized to do so.
The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and William Squires, Special Agent-in-Charge, Northeastern Region, United States Department of Agriculture, Office of Inspector General.
The federal government, through the United States Department of Agriculture, Food and Nutrition Service (FNS), administers the SNAP program. SNAP utilizes federal tax dollars to subsidize low income households, affording such households the opportunity to achieve a more nutritious diet by increasing their food purchasing ability.
In New York, individuals who receive SNAP benefits no longer redeem their benefits by using paper food stamp coupons, but rather redeem them electronically through the use of an Electronic Benefits Transfer (EBT) card, which operates much like ATM cards. The EBT cards may be used by recipients to purchase eligible food items at retail food stores that are authorized by FNS to participate in SNAP and have EBT terminals located in the stores. As a purchase is made, the retailer runs the EBT card through the terminal, and the amount of the purchase is deducted from the recipient’s card. The purchase amount is then electronically credited to the retail food store owner’s bank account.
SNAP benefits may be accepted by authorized retailers only in exchange for eligible food items. Items such as beer, cigarettes, paper goods, and soaps are not eligible for purchase. SNAP benefits may not lawfully be exchanged for cash under any circumstances and may not lawfully be used to pay off credit accounts. SNAP benefits may be accepted only by retailers authorized to participate in SNAP by FNS.
Tareb used his position as an agent at Century Payments, a third-party vendor and distributor of EBT terminals, to provide EBT terminals capable of processing SNAP benefits and authorization codes to more than 25 retailers that were not authorized by FNS to accept SNAP benefits. In doing so, Tareb facilitated more than $6 million in unauthorized SNAP transactions and enabled the unlawful exchange of SNAP benefits for cash.
In announcing the guilty plea, Mr. Capers extended his grateful appreciation to the United States Department of Agriculture, Office of Inspector General.
Today’s guilty plea proceeding was held before United States Magistrate Judge Steven M. Gold. When sentenced, Tareb faces up to 20 years in prison, as well as forfeiture and a fine.
The government’s case is being prosecuted by Assistant United States Attorney Saritha Komatireddy.
The Defendant:
FOWZI NAJI TAREB
Age: 43
Brooklyn, New YorkE.D.N.Y. Docket No. 15-CR-038
Eight Defendants Charged with Firearms Trafficking OffensesRead the Press Release
A ten-count indictment was unsealed today in United States District Court for the Eastern District of New York charging eight defendants with conspiring to make false statements in the acquisition of firearms and/or with related firearm acquisitions or trafficking offenses. One of the defendants, Curtis Clark, was also charged as being a felon in possession of a firearm.
Clark was previously arraigned before Magistrate Judge Viktor V. Pohorelsky in Brooklyn on June 15, 2016. Four of the remaining defendants were arrested earlier today in South Carolina, and their initial appearances are scheduled this afternoon before United States Magistrate Judge Kaymani D. West at the federal courthouse in Florence, South Carolina. The government will seek to remove to New York for prosecution the defendants arrested out of state.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Delano A. Reid, Special Agent-in-Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and William J. Bratton, Commissioner, New York City Police Department (NYPD).
“This office is committed to preventing the flow of illegal firearms up the Interstate 95 corridor, also referred to as the ‘Iron Pipeline,’ into New York,” stated United States Attorney Capers. “Today’s arrests are another example of our resolve to prosecute those who illegally traffic firearms, as well as the straw buyers who enable the traffickers to engage in this potentially deadly and illegal business.”
“As alleged in the indictment and complaint, Curtis Clark thought that he could supply firearms along the Iron Pipeline to the streets of New York City. His co-conspirators acted as straw purchasers, buying firearms on Clark’s behalf from dealers in South Carolina and falsifying the required Federal forms in order to make it appear that they were the actual purchasers. This ensured that if any of the firearms were recovered in crime scenes, they could not be traced directly back to Clark. As a result of the investigation by the ATF Joint Firearms Task Force, Clark and his co-conspirators will now face the consequences of the charged crimes. Today’s indictment carries two messages: To those who would traffic the instruments of violent crime, we are watching and you will be caught. To those that think straw purchasing firearms is a victimless crime, your actions can have severe consequences, both to you, and to the community where those firearms eventually wind up. We’d like to extend our gratitude to the NYPD and the U.S. Attorney’s Office for their efforts and commitment during this investigation,” stated ATF Special Agent-in-Charge Reid.
As alleged in the indictment and in a complaint previously unsealed against Clark, his co-defendants Jonathan Grant, Shamika Cross, Alexis Gilbert, Ganika McCollum, Alexis Morris, Ashley Sowells, and Angel Wheeler agreed to purchase firearms for him at firearms stores in South Carolina, falsely claiming that they were purchasing the guns for themselves. Clark and others then illegally transported the guns to New York for sale in Brooklyn. On May 28, 2014, Clark was stopped in a vehicle in Brooklyn, and nine firearms were seized, including six Glock semi-automatic pistols. ATF agents then began the investigation into the source of the seized firearms, including reviewing the federal forms required to be completed when a firearm is purchased from a licensed firearm dealer, interviewing personnel at the gun stores involved in the sales, and interviewing the individuals who had purchased the firearms seized from Clark’s vehicle. The investigation established that the seized firearms had been purchased for Clark by Cross, Gilbert, McCollum, Morris, Sowells, and Wheeler at firearms stores in and around Marion, South Carolina, in April and May 2014.
On January 1, 2016, Clark, a previously convicted felon, was arrested in Marion, South Carolina, in possession of a loaded Smith & Wesson .38 caliber pistol.
The charges in the indictment and complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by Assistant United States Attorneys Mark E. Bini and Nomi D. Berenson.
The Defendants:
CURTIS CLARK
Age: 21
Marion, South CarolinaJonathan Grant
Age: 21
Marion, South CarolinaShamika Cross
Age: 25
Marion, South CarolinaAlexis Gilbert
Age: 24
Atlanta, GeorgiaGanika McCollum
Age: 25
Dillon, South CarolinaAlexis Morris
Age: 34
Marion, South CarolinaAshley Sowells
Age: 25
Marion, South CarolinaAngel Wheeler
Age: 23
Marion, South CarolinaE.D.N.Y. Docket No. 16-CR-315
California Registered Broker Pleads Guilty to Participating in A $20 Million Market Manipulation SchemeRead the Press Release
Earlier today, Darren Goodrich, a registered broker at a brokerage firm in El Segundo, California, pleaded guilty to conspiracy to commit securities fraud for manipulating the stock of Cubed, Inc. (Cubed), which traded under the ticker symbol CRPT. The guilty plea was entered before United States Magistrate Judge Vera M. Scanlon at the federal courthouse in Brooklyn, New York. When sentenced, Goodrich faces up to five years in prison, as well as restitution, criminal forfeiture, and a fine.
The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office.
According to court filings and facts presented at the plea hearing, between March 2014 and July 2014, Goodrich and his co-conspirators engaged in a scheme to defraud investors and potential investors in Cubed by artificially controlling the price and volume of traded shares in the company through fraudulent concealment of the defendants’ and their co-conspirators’ ownership interests and engineering price movements and trading volume in the stock. In March 2014, Goodrich’s co-conspirators took Cubed public through an asset purchase agreement. On April 22, 2014, Cubed’s stock began trading in earnest. Between April 22, 2014 and April 30, 2014, Goodrich and his co-conspirators concocted trading volume in this stock by purchasing more than 50% of the total number of Cubed shares purchased during this period.
Between May 2, 2014 and June 29, 2014, law enforcement authorities conducted a judicially-authorized wiretap of one of Goodrich’s co-conspirator’s cellular telephone. The wiretap revealed that Goodrich and his co-conspirators fraudulently manipulated Cubed’s stock by artificially controlling the price and volume of that stock through orchestrated trading. Rather than generating significant market interest and causing a quick pump and dump that would elicit regulators’ scrutiny, the conspirators gradually increased the price of Cubed’s stock to give it the appearance of a legitimate company with genuine and steady market demand for the security. For example, on May 5, 2014, while Cubed was in a period of gradual increase from $5.20 on April 22, 2014 to $5.42 on May 22, 2014, a co-conspirator called Goodrich, and stated, “Can you buy a 100 and see if [the other market maker] moves?” Goodrich complied and then responded, “Yeah, they’re going.”
Goodrich and his co-conspirators used an attorney escrow account to successfully control the price and volume of Cubed’s stock. On June 23, 2014, Cubed reached its highest closing price of $6.75 per share, resulting in a market capitalization of approximately $200 million. Previously, Cubed filed with the SEC a Form 10-Q and reported less than $1,500 in cash, zero revenue, negative stockholders’ equity, a net loss of $15,000, and accrued professional fees of $131,824.
* * *
The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Shannon C. Jones, Christopher L. Nasson, and Patrick Hein are in charge of the prosecution, with assistance provided by Assistant United States Attorney Claire S. Kedeshian of the Office’s Civil Division, which is responsible for the forfeiture of assets.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit ww.StopFraud.gov.
The Defendant:
DARREN GOODRICH
Age: 37
Residence: Manhattan Beach, CaliforniaE.D.N.Y. Docket No. 14-CR-399 (S-1) (ENV)
Southampton Town Councilman Sentenced to 24 Months in Prison for Conspiring to Illegally Distribute OxycodoneRead the Press Release
Earlier today in Central Islip, NY, Bradley Bender, former Southampton Town Councilman, was sentenced to 24 months’ imprisonment, three years supervised release and $5,000 forfeiture, following his guilty plea on November 24, 2015, to conspiring to illegally distribute oxycodone. The sentencing proceedings were held before U.S. District Judge Arthur D. Spatt.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York.
In announcing the sentence, United States Attorney Robert L. Capers stated, “Today’s sentence is a reminder to all those entrusted to represent the interests of the public that they will be held accountable if they engage in criminal activity and violate that trust.” Mr. Capers expressed his grateful appreciation to the DEA’s Long Island Tactical Diversion Squad, which led the government’s investigation in this case.
According to court filings and statements made in court at the time he entered the guilty plea, between July 2012 and June 2015, Bender received phony prescriptions for oxycodone from a Riverhead physician assistant, Michael Troyan. Bender filled those prescriptions and illegally exchanged the oxycodone pills for cash and steroids with another co-conspirator. The oxycodone pills were then re-sold to drug abusers.
Troyan was arrested on November 4, 2015, and pleaded guilty last Friday, June 17, 2016, before United States District Judge Denis R. Hurley, to conspiring to illegally distribute oxycodone. Troyan is scheduled to be sentenced on Septembeer 30, 2016.
Bender’s resignation as a Councilman was accepted by the Southampton Town Board on the day of his guilty plea.
This case is part of a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York as part of the Prescription Drug Initiative. In January 2012, this Office and the DEA, in conjunction with the five District Attorneys in this district, the Nassau and Suffolk County Police Departments, the New York City Police Department, and New York State Police, along with other key federal, state, and local government partners, launched the Initiative to mount a comprehensive response to what the United States Department of Health and Human Services Center for Disease Control and Prevention has called an epidemic increase in the abuse of so-called opioid analgesics. To date, the Initiative has brought over 160 federal and local criminal prosecutions, including the prosecution of 19 health care professionals, taken civil enforcement actions against a hospital, a pharmacy, health clinic, and pharmacy chain, removed prescription authority from numerous rogue doctors, and expanded information-sharing among enforcement agencies to better target and pursue drug traffickers. The Initiative also is involved in an extensive community outreach program to address the abuse of pharmaceuticals.
The government’s case was prosecuted by Assistant United States Attorney Allen L. Bode.
The Defendant:
Name: BRADLEY BENDER
Age: 55
Residence: Northampton, New YorkE.D.N.Y. Docket No. 15-CR-593(ADS)
Attorney General Loretta E. Lynch Announces Extradition of Five Defendants Charged in Connection with Mexican Sex Trafficking EnterpriseRead the Press Release
Charged Offenses Include Sex Trafficking, Interstate Prostitution, Alien Smuggling, Money Laundering, Racketeering and Racketeering Conspiracy in Connection with Scheme to Compel Mexican Women and Girls into Prostitution in the United States
Five defendants were arraigned in federal court today following their extradition from Mexico on charges of sex trafficking and related violations as the latest development resulting from coordinated bilateral human trafficking enforcement efforts.
Attorney General Loretta E. Lynch, Director Sarah R. Saldaña of U.S. Immigration and Customs Enforcement (ICE); Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division, and U.S. Attorney Robert L. Capers of the Eastern District of New York made the announcement.
Jovan Rendon-Reyes, aka Jovani, 32; Guillermina Rendon-Reyes, 44; Jose Rendon-Garcia, aka Gusano, 32; Felix Rojas, 45; and Severiano Martinez-Rojas, 50, were arraigned before U.S. Magistrate Judge James Orenstein of the Eastern District of New York on a 27-count indictment following their extradition from Mexico. The indictment, which was unsealed on Nov. 19, 2015, charges eight defendants with racketeering and racketeering conspiracy involving predicate acts of sex trafficking by force, fraud and coercion; sex trafficking of minors; interstate prostitution; alien smuggling; money laundering and related offenses. Three co-defendants charged in the same indictment, Saul Rendon-Reyes, aka Satanico, 37; Francisco Rendon-Reyes, aka Pancho, 27; and Odilon Martinez-Rojas, aka Chino and Saul, 44, were arraigned in the Eastern District of New York on Nov. 19, 2015.
“Human trafficking is a heinous crime that preys upon the most vulnerable members of our society,” said Attorney General Lynch. “Today, as part of the Department of Justice’s ongoing efforts to end this appalling practice, we are proud to announce the extradition of five Mexican traffickers who smuggled women and girls into the United States as sex slaves. Our action would not be possible without the close cooperation of our partners in Mexican law enforcement, and I want to thank them for their ongoing commitment to working together to uphold the rule of law in both of our countries. Going forward, we will continue to stand with Mexico – and with all of our international partners – to end human trafficking and to bring all those who facilitate this crime to justice.”
“These five extraditions speak to the strong bilateral relationship and commitment between the United States and Mexico to holding those alleged to have engaged in the ruthless act of human trafficking accountable,” said Director Saldaña. “ICE Homeland Security Investigations (HSI) will continue leveraging all of its investigative capabilities to disrupt human trafficking syndicates no matter where in the world they operate.”
“Vindicating the rights of vulnerable individuals is among the highest priorities of the Department of Justice and the Civil Rights Division,” said Principal Deputy Assistant Attorney General Gupta. “The defendants are charged with operating a scheme across international borders to exploit young women and girls by prostituting them for the benefit of the defendants. We will work tirelessly to pursue justice for those held in modern-day slavery.”
“The extradition of these five defendants is an important step in our effort to bring some sense of closure to the victims of this terrible crime, and a testament to our resolve to end human trafficking,” said U.S. Attorney Capers. “Our commitment to prosecute sex traffickers and those who would enslave others is unwavering. We would like to extend our deep gratitude to the government of Mexico and our law enforcement partners who made it possible to bring these defendants to the United States so that we may seek justice for their victims.”
The indictment alleges that the defendants were members of an international criminal organization, identified in the indictment as the Rendon-Reyes Trafficking Organization, which engaged in sex trafficking and related criminal activity between December 2004 and June 2014 in Queens, New York; Atlanta; and Jemison, Alabama, among other locations. According to the allegations in the indictment, the defendants used force, threats of force, fraud and coercion to cause young women and girls from Mexico and Latin America to engage in prostitution in the United States.
Since 2009, the Department of Justice and HSI have collaborated with Mexican law enforcement counterparts in a Bilateral Human Trafficking Enforcement Initiative aimed at strengthening high-impact prosecutions under both U.S. and Mexican law. The initiative is aimed at dismantling human trafficking networks operating across the U.S.-Mexico border, bringing human traffickers to justice, reuniting victims with their children and restoring the rights and dignity of human trafficking victims, held under the trafficking networks’ control. These efforts have resulted in successful prosecutions in both Mexico and the United States, including U.S. federal prosecutions of more than 50 defendants in multiple cases in New York, Georgia, Florida and Texas since 2009, and numerous Mexican federal and state prosecutions of associated sex traffickers. The extraditions in this case are the latest development in the Eastern District of New York’s comprehensive anti-trafficking program, which has to date indicted more than 65 defendants in sex trafficking cases and provided assistance to more than 130 victims, including 36 minors. In addition, through the Eastern District of New York’s anti-trafficking program, 18 children have been reunited with their victim-mothers.
The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
In announcing the extradition and arraignment, Attorney General Lynch, Director Saldaña, Principal Deputy Assistant Attorney General Gupta and U.S. Attorney Capers commended the HSI’s New York Office, the HSI Mexico Attaché Office, the Department of Justice’s Office of International Affairs, the State Department and the New York City Police Department for their assistance and praised the government of Mexico for its role in advancing bilateral anti-trafficking enforcement efforts.
The case is being prosecuted by Assistant U.S. Attorneys Taryn A. Merkl and Margaret Lee of the Eastern District of New York and Deputy Director Benjamin Hawk of the Civil Rights Division’s Human Trafficking Prosecution Unit.
Rendon-Reyes et al Indictment
Executive Director Charged with Embezzling from Charity to Fund Home Renovations and Personal ExpensesRead the Press Release
Earlier today, a federal grand jury sitting in Brooklyn returned an indictment charging Yolanda Vitulli, the executive director of a charity that provides services to individuals with developmental disabilities, with embezzling approximately $100,000 from the charity for her personal use.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and New York State Inspector General Catherine Leahy Scott.
As is alleged in the indictment, between January 2001 and May 2016, Vitulli served as the Executive Director of Tender Care Human Services Inc. (Tender Care), a not-for-profit social service provider based in Queens, New York, that provided services to individuals with autism and other development disabilities throughout the New York City metropolitan area. Tender Care received approximately $3 million in federal and New York State Medicaid funding each year to provide the services.
The government’s investigation revealed that between 2009 and May 2014, Vitulli embezzled Tender Care funds to pay housekeepers to clean her residence, do laundry, and provide childcare. Additionally, between January 2012 and November 2013, Vitulli used Tender Care funds to hire a contractor to perform work at her residence, including purchasing and installing a hot tub, fence, furniture, and security cameras.
“The embezzlement of public funds meant to benefit members of our communities most in need of assistance is a serious crime,” stated United States Attorney Capers. “With this indictment, we serve notice that those who engage in such conduct will be vigorously investigated and prosecuted by this Office.” Mr. Capers extended his grateful appreciation to the United States Department of Labor, Office of the Inspector General, for its assistance.
“The very definition of charity is to give to those in need. Instead, the subject in this case decided the $100,000 she’s accused of stealing would be better spent making her life easier. Theft is a crime, but to take from those who are in need of help makes this case more egregious,” stated FBI Assistant Director-in-Charge Rodriguez.”
“The defendant allegedly stole public funds meant for the developmentally disabled in order to subsidize her own life of luxury,” said New York State Inspector General Leahy Scott. “This indictment should serve as warning to any officers and agents of charitable providers who exploit taxpayer funds intended for critical public services; they will be identified, apprehended, and prosecuted to the fullest extent of the law. I will continue to work closely with my state and federal law enforcement partners to pursue and hold accountable anyone who attempts to defraud the public welfare system and the people it serves.”
The charge in the indictment is merely an allegation, and the defendant is presumed innocent unless and until proven guilty. If convicted of embezzling public funds, the defendant faces a maximum sentence of ten years’ imprisonment.
The government’s case is being prosecuted by Assistant United States Attorneys Robert Polemeni and Nathan Reilly.
The Defendant:
YOLANDA VITULLI
Age: 52
Mohnton, PennsylvaniaE.D.N.Y. Docket No. 16-CR-344
Defendant Convicted at Trial for Drug and Firearm Related Murder in AlbanyRead the Press Release
Late yesterday afternoon, following a one week trial, a federal jury in Brooklyn, New York, returned a guilty verdict against James Cureton for drug and firearm related murder and drug trafficking. The charges arose out of the defendant’s participation in a murder that took place in Albany, New York. When sentenced by United States District Carol B. Amon, the defendant faces a maximum sentence of up to life imprisonment and a mandatory minimum sentence of 20 years on the drug-related count of conviction.
The verdict was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office; and William J. Bratton, Commissioner, New York City Police Department.
“This verdict sends the clear message that drug traffickers who use violence as a tool of their trade will be investigated, apprehended, and held fully accountable for their crimes,” stated United States Attorney Capers. Mr. Capers thanked the Albany Police Department for its assistance in this case.
“The business of drug trafficking and criminal behavior doesn't often end with a healthy retirement in some sunny locale near a beach. In this case, the defendant who chose a life of crime will most likely spend the rest of it in federal prison for murder. The FBI Metro Safe Streets Task Force and our law enforcement partners will not stop going after criminals who make our communities dangerous for those people who choose to abide by the law,” stated FBI Assistant Director-in-Charge Rodriguez.
“For drug traffickers who use violence and murder to further their trade: we will employ every tool to bring justice for your victims. I thank the jury for their time in rendering this verdict,” stated New York Police Commissioner Bratton.
On October 31, 2009, Cureton and a coconspirator killed Raymond Books because he had ceased making payments on a $37,000 drug debt. Cureton drove with his coconspirator to Albany on the day of the murder and brought a spray bottle of cleaning solution to remove any traces of their presence at the crime scene. Before arriving, Cureton also enlisted another individual to get Brooks’s girlfriend out of their Albany apartment, ensuring there would be no witnesses there. Once inside the premises, the coconspirator shot and killed Brooks. Cureton then drove them back to Staten Island.
Later that night, Cureton reached out and began to intimidate potential witnesses who might be able to connect him to the murder. Cureton also continued trafficking narcotics with the coconspirator and their associates for several years after the murder.
The government’s case is being prosecuted by the Office’s Organized Crime and Gangs, and International Narcotics and Money Laundering Sections. Assistant United States Attorneys Alicyn Cooley and Jennifer Carapiet are in charge of the prosecution.
The Defendant:
JAMES CURETON
Age: 43
Staten Island, New YorkE.D.N.Y. Docket No. 16-CR-23 (CBA)
Riverhead Physician Assistant Pleads Guilty to Conspiracy to Illegally Prescribe OxycodoneRead the Press Release
Michael Troyan, a physician assistant who operated two urgent care clinics on the east end of Long Island, today pleaded guilty to conspiring to illegally distribute oxycodone, a highly addictive prescription pain medication. The guilty plea was entered before United States District Judge Denis R. Hurley at the U.S. Courthouse in Central Islip. When sentenced, Troyan faces a maximum sentence of 20 years’ imprisonment and a $1 million fine.
In announcing the guilty plea, United States Attorney Robert L. Capers expressed his grateful appreciation to the DEA’s Long Island Tactical Diversion Squad, which led the government’s investigation in this case.
According to court filings and statements made in court during the guilty plea, between November 2011 and October 2015, Troyan, who was authorized to prescribe controlled substances, issued prescriptions for thousands of oxycodone pills to co-conspirators for the purpose of illegally re-selling the pills. During the investigation, Troyan was captured on video in an undercover operation writing phony prescriptions at his Riverhead medical office for oxycodone and receiving large quantities of cash – half the profit from prior illegal sales. As part of his guilty plea, Troyan agreed to forfeit $710,290 attributable to illegal prescription sales.
One of Troyan’s co-conspirators was Southampton Town Councilman Bradley Bender, who is scheduled to be sentenced on June 24, 2016. Bender’s resignation as a Councilman was accepted by the Southampton Town Board on the day of his guilty plea, November 24, 2015.
This case is part of a series of federal prosecutions by the United States Attorney’s Office as part of the Prescription Drug Initiative. In January 2012, this Office and the DEA, in conjunction with the five District Attorneys in the Eastern District of New York, the Nassau and Suffolk County Police Departments, the New York City Police Department, and New York State Police, along with other key federal, state, and local government partners, launched the Initiative to mount a comprehensive response to what the United States Department of Health and Human Services Center for Disease Control and Prevention has called an epidemic increase in the abuse of opioid analgesics. To date, the Initiative has brought over 160 federal and local criminal prosecutions, including the prosecution of 18 health care professionals, taken civil enforcement actions against a hospital, a pharmacy, and a pharmacy chain, removed prescription authority from numerous rogue doctors, and expanded information-sharing among enforcement agencies to better target and pursue drug traffickers. The Initiative also is involved in an extensive community outreach program to address the abuse of pharmaceuticals.
The government’s case is being prosecuted by Assistant United States Attorneys Allen Bode and James Knapp.
The Defendant:
Name: MICHAEL TROYAN
Age: 37
Residence: Riverhead, New YorkMember of Violent Home Invasion Robbery Crew Sentenced to 420 Months for Conspiring to Commit Drug Robberies, Conspiring to Distribute Cocaine and Heroin, and Illegally Using A FirearmRead the Press Release
Nelson Nolasco was sentenced today to 420 months in prison by United States District Judge I. Leo Glasser at the federal courthouse in Brooklyn. In the middle of his jury trial held in November 2011, Nolasco pleaded guilty to robbery conspiracy, cocaine trafficking conspiracy, and firearm charges.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York Division.
Nolasco is the last of 25 defendants to be sentenced in this prosecution of a violent robbery crew that targeted drug traffickers. During some of these robberies, members of the robbery crew posed as law enforcement officers, staged fake arrests of narcotics traffickers, and then forcibly seized the traffickers’ drugs and drug proceeds. Members of the robbery crew often restrained their victims with handcuffs, rope, or duct tape. The crew members often brandished firearms and physically assaulted victims. Crew members sold the stolen drugs and divided the proceeds among themselves. To date, the prosecution has resulted in the conviction of two NYPD officers and one NYPD auxiliary officer, all of whom participated in multiple drug robberies.
Nolasco was a particularly violent member of the robbery crew who participated in at least 15 robberies and attempted robberies, during which he and his co-conspirators robbed narcotics traffickers of at least 118 kilograms of cocaine and $150,400 in U.S. currency.
During one such robbery in upper Manhattan in 2005, Nolasco shot and killed a narcotics trafficker who refused to reveal the location of drugs. Nolasco and his co-conspirator later recovered two kilograms of cocaine from the victim’s apartment. During an attempted robbery of a residence in the Bronx in 2005, Nolasco and his co-conspirators broke down the rear door with a sledgehammer, entered the residence, and handcuffed four occupants of the house. Nolasco then personally threatened these victims at gunpoint. During a robbery in Queens in 2006, Nolasco and his co-conspirators, impersonating police officers, abducted a drug trafficker and brought him to his stash house. While forcing the drug trafficker into the stash house, the crew encountered two additional drug traffickers. Nolasco jumped on one of the drug traffickers and placed a gun to his head until he revealed the location of drugs at the stash house.
In another incident in June 2006, Nolasco attempted to murder two drug traffickers in the Bronx. A few weeks earlier, the drug traffickers had provided Nolasco with 10 kilograms of cocaine to sell. When the drug traffickers met with Nolasco to collect the narcotics proceeds, Nolasco shot them rather than pay them the money from the sale. After shooting both drug traffickers in the abdomen, Nolasco tried to complete the murder with shots to each victim’s head but his gun jammed twice. Both drug traffickers survived the shooting.
Mr. Capers extended his grateful appreciation to the DEA New York Drug Enforcement Task Force, comprising agents and officers of the DEA, New York City Police Department, and New York State Police; and U.S. Immigration and Customs Enforcement, Homeland Security Investigations.
The government’s case is being prosecuted by Assistant United States Attorneys Alexander Solomon, Douglas M. Pravda, and Sylvia S. Shweder.
The Defendant:
NELSON NOLASCO
Age: 44
Dominican RepublicE.D.N.Y. Docket No. 08-CR-242
Long Island Man Pleads Guilty to Defrauding Homeowners in Multi-Million Dollar Loan Modification SchemeRead the Press Release
Earlier today, David Gotterup pleaded guilty at the federal courthouse in Brooklyn, New York, to conspiracy to commit wire fraud by defrauding distressed homeowners in a loan modification scheme. When sentenced, Gotterup faces up to 30 years in prison, as well as restitution, criminal forfeiture, and a fine.
The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); Christina Scaringi, Special Agent-in-Charge, U.S. Department of Housing and Urban Development, Office of Inspector General (HUD/OIG); and Christy Goldsmith Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP).
According to court filings and facts presented at the guilty plea proceeding, from 2008 to 2012, Gotterup and his co-conspirators made a series of false promises to convince more than a thousand distressed homeowners seeking relief through government mortgage modification programs to pay thousands of dollars each in advance fees to numerous companies owned or controlled by Gotterup, including Express Modifications, Express Home Solutions, True Credit Empire, LLC, Green Group Today, Inc., The Green Law Group, Inc., and JG Group. Among other things, Gotterup directed telemarketers and salespeople to lie to distressed homeowner victims by telling them that they were preapproved for loan modifications and that they were retaining a law firm and an attorney who would complete their mortgage relief applications and negotiate with the banks to modify the terms of their mortgages. Contrary to these representations, Gotterup and his co-conspirators did little or no work in connection with these fraudulently induced advanced fees. Gotterup was arrested in October 2015 and remains incarcerated.
In announcing the guilty plea, Mr. Capers extended his appreciation to the agencies that led the government’s investigation and thanked the U.S. Small Business Administration and the Staten Island District Attorney’s Office for their assistance.
Today’s guilty plea took place before United States District Judge Nicholas G. Garaufis.
The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Sylvia Shweder and Bonni Perlin are in charge of the prosecution.
* * *
This prosecution was the result of efforts by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state’ and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, visit http://www.StopFraud.gov.
The Defendant:
DAVID GOTTERUP
Age: 36
Oceanside, New YorkE.D.N.Y. Docket No. 15-CR-498 (NGG)
Five Members of A Bronx-Based Drug Trafficking Organization Arrested on Narcotics Conspiracy and Money Laundering ChargesRead the Press Release
A two-count indictment was unsealed this week in the United States District Court in Brooklyn charging six defendants with conspiracy to distribute cocaine and/or money laundering. Yesterday, a United States Postal Carrier assigned to the Highbridge Postal Station in the Bronx was arraigned before Magistrate Judge Viktor V. Pohorelsky at the federal courthouse in Brooklyn. Today, four additional members of the organization were arrested. Three of the defendants are scheduled to be arraigned today before Magistrate Judge Pohorelsky. The fifth defendant, Carlos Bello Tirado, will be arraigned today in the Middle District of Florida, and the government will seek his removal to New York.
The charges and arrests were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Angel M. Melendez, Special Agent-in-Charge, New York Field Office, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI); Phillip R. Bartlett, Postal Inspector-in-Charge, United States Postal Inspection Service, New York Field Office, and Eileen Neff, Special Agent-in-Charge, United States Postal Service, Office of Inspector General (OIG), Northeast Field Office.
As detailed in the indictment and other court filings by the government, between approximately 2011 and 2013, the defendants Kelvin Cisnero Santos, Saul Ovalles Corniel, Carlos Bello Tirado, Ernest Pena, and Jermaine Sandifer were members of a large-scale drug trafficking organization based in the Bronx. The organization purchased hundreds of kilograms of cocaine from suppliers in Puerto Rico, packaged the drugs, and sent the drug-laden parcels through the mail from Puerto Rico to pre-arranged addresses in the Bronx. The defendant Sandifer, a United States postal carrier, intercepted those parcels at the post office and delivered them to members of the organization. According to the detention letter filed by the government, each parcel sent to Sandifer contained approximately one to two kilograms of cocaine, and Sandifer was paid between $1,000 and $5,000 per parcel. The defendants also conspired to mail cocaine from Puerto Rico to numerous post office boxes operated by the organization in Queens, Brooklyn, the Bronx, and New Jersey. The cocaine was sold to various distributors in New York and New Jersey.
Defendants Santos, Corniel, Tirado, Pena, and others laundered proceeds from the drug sales through bank accounts in the New York metropolitan area to pay suppliers and make additional purchases of cocaine.
“However creative drug traffickers are in delivering their lethal product to our shores and the streets of our communities, we and our partners in law enforcement are committed to stopping them. The defendants will now be held to account,” stated United States Attorney Capers. Mr. Capers extended his grateful appreciation to the Drug Enforcement Administration, New York Field Office; the Internal Revenue Service, Criminal Investigations, New York Field Office; the Port Authority of the New York and New Jersey Police Department; the New York City Police Department; and the Queens District Attorney’s Office for their assistance in this case.
“This U.S. postal employee allegedly used his trusted position as a letter carrier to conspire with others to flood our streets with hundreds of kilos of cocaine,” said Special Agent-in-Charge Melendez. “HSI and its law enforcement partners are committed to dismantling drug trafficking organizations that wreak havoc on our neighborhoods.”
“Postal Inspectors along with our law enforcement partners take the security and safety of the U.S. Mail very seriously, and will vigorously pursue and bring to justice anyone who uses our nations mail system to facilitate the transport of illegal drugs,” said Inspector-in- Charge Bartlett.
Special Agent-in-Charge Neff stated, “USPS-OIG investigations help to maintain the integrity of Postal Service processes and personnel. In rare situations such as this, with a Postal Service employee allegedly abusing a position of trust, our Special Agents work jointly with our law enforcement partners to investigate those who transport illegal narcotics through the U.S. Mail.”
The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted, the defendants face a mandatory minimum sentence of ten years and a maximum penalty of life imprisonment.
The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section. Assistant United States Attorneys Douglas M. Pravda and Julia Nestor are in charge of the prosecution.
The Defendants:
KELVIN CISNERO SANTOS
Age: 48
Bronx, New YorkSAUL OVALLES CORNIEL
Age: 40
Newark, New JerseyCARLOS BELLO TIRADO
Age: 40
Leesburg, FloridaERNEST PENA
Age: 40
Bronx, New YorkJermaine sandifer
Age: 40
Perth Amboy, New JerseyE.D.N.Y. Docket No. 16-CR-309
Chief Executive Officer of International Metallurgical Company Pleads Guilty to Conspiring to Export Specialty Metals to IranRead the Press Release
Earlier today in federal court in Brooklyn, Erdal Kuyumcu, the chief executive officer of Global Metallurgy, LLC, a company based in Woodside, New York, pleaded guilty to one count of conspiring to violate the International Emergency Economic Powers Act in connection with the export of specialty metals from the United States to Iran. Today’s plea proceeding took place before Chief United States District Judge Dora L. Irizarry.
The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and John P. Carlin, Assistant Attorney General for National Security.
As detailed in the criminal information to which he pleaded guilty and in related court filings, Kuyumcu, a United States citizen, conspired to export from the United States to Iran a metallic powder composed of cobalt and nickel without having obtained the required license from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC). The metallic powder can be used to coat gas turbine components, such as turbine blades, and can also be used in aerospace, missile production, and nuclear applications. Such specialized metals are closely regulated by the U.S. Department of Commerce to combat nuclear proliferation and protect national security, and exporting them without an OFAC license is illegal. Kuyumcu and others conspired to obtain over one thousand pounds of the metallic powder from a U.S.-based supplier for export to Iran. To hide the true destination of the goods from the U.S. supplier, Kuyumcu and a co-conspirator arranged for the metallic powder to be shipped first to Turkey and then to Iran.
In announcing the guilty plea, Mr. Capers extended his grateful appreciation to the Federal Bureau of Investigation, New York Field Office, and the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, New York Field Office, the agencies that led the government’s investigation.
At sentencing, Kuyumcu faces up to 20 years in prison a $1 million fine.
The case is being prosecuted by Assistant U.S. Attorneys Tiana A. Demas and Ameet B. Kabrawala of the Eastern District of New York, with assistance from Trial Attorney David Recker of the National Security Division’s Counterintelligence and Export Control Section.
The Defendant:
ERDAL KUYUMCU
Age: 44
Woodside, New YorkE.D.N.Y. Docket No. 16-CR-308 (DLI)
CEO of International Metallurgical Company Pleads Guilty to Conspiring to Export Specialty Metals to IranRead the Press Release
Erdal Kuyumcu, 44, the CEO of Global Metallurgy LLC, a company based in Woodside, New York, pleaded guilty to one count of conspiring to violate the International Emergency Economic Powers Act, in connection with the export of specialty metals from the United States to Iran.
The guilty plea was announced by Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Robert L. Capers of the Eastern District of New York.
As detailed in the criminal information to which he pleaded guilty and other court filings, Kuyumcu, a U.S. citizen, conspired to export from the United States to Iran a metallic powder composed of cobalt and nickel, without having obtained the required license from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC). The metallic powder can be used to coat gas turbine components, including turbine blades, and can be used in aerospace, missile production and nuclear applications. Such specialized metals are closely regulated by the U.S. Department of Commerce to combat nuclear proliferation and protect national security, and exporting them without an OFAC license is illegal. Kuyumcu and others conspired to obtain over 1,000 pounds of the metallic powder from a U.S.-based supplier for export to Iran. To hide the true destination of the goods from the U.S. supplier, Kuyumcu and a co-conspirator arranged for the metallic powder to be shipped first to Turkey and then to Iran.
Kuyumcu pleaded guilty before Chief U.S. District Judge Dora L. Irizarry of the Eastern District of New York. At sentencing, he faces up to 20 years in prison and a $1 million fine.
Assistant Attorney General Carlin joined U.S. Attorney Capers in thanking the FBI’s New York Field Office and the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, New York Field Office.
The case is being prosecuted by Assistant U.S. Attorneys Tiana A. Demas and Ameet B. Kabrawala of the Eastern District of New York, with assistance from Trial Attorney David Recker of the National Security Division’s Counterintelligence and Export Control Section.
Kuyumcu Information
Long Island Attorney Sentenced to Sixteen Months in Prison for Forgery of Bankruptcy Judge’s SignatureRead the Press Release
Earlier today in Central Islip, NY, Jeffrey I. Stark, an attorney admitted to practice law in New York, was sentenced to 16 months’ imprisonment to be followed by three years of supervised release based on his guilty plea on August 7, 2015, for forgery of a judicial signature. The sentencing proceeding was held before U.S. District Judge Arthur D. Spatt.
The charge against Stark arose after he was retained in 2012 by a couple to file bankruptcy proceedings on their behalf in the United States Bankruptcy Court for the Eastern District of New York. Stark never filed a bankruptcy petition and instead provided the couple with a fake discharge order bearing the forged signature of a United States Bankruptcy Judge.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York.
In announcing the sentence, United States Attorney Capers stated, “Attorneys, as trusted officers of the court, are rightfully held to a high standard of conduct, and Mr. Stark violated the trust of his clients and the court by his criminal conduct here.” Mr. Capers expressed his grateful appreciation to the FBI, the agency responsible for leading the government’s the investigation.
Stark was suspended from the practice of law on November 20, 2013, by the New York State Appellate Division, 1st Department.
The government’s case was prosecuted by Assistant United States Attorney Allen L. Bode.
The Defendant:
JEFFREY I. STARK
Age: 53
Residence: Massapequa, New YorkFourteen Defendants Charged with Drug Trafficking and Illegal Weapons Possession in the Cypress Hills Houses in BrooklynRead the Press Release
Four indictments and two complaints were unsealed today in United States District Court for the Eastern District of New York charging 14 defendants for their involvement in narcotics trafficking and illegal weapons possession in the Cypress Hills Houses, a New York City Housing Authority complex located in East New York, Brooklyn.
The defendants’ initial appearances and arraignments are scheduled this afternoon before United States Magistrate Judge Cheryl L. Pollak at the federal courthouse in Brooklyn.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); and William J. Bratton, Commissioner, New York City Police Department (NYPD).
“These charges send the message that the United States Attorney’s Office stands fully in support of the residents of the Cypress Hills Houses who have been victimized too long by those who have been flooding their neighborhood with guns and drugs,” stated United States Attorney Capers. Mr. Capers thanked the Kings County District Attorney’s Office for their assistance with the government’s investigation.
“The scope and nature of this investigation reads like something out of a Hollywood movie script, involving a massive drug trafficking network and deadly violence. But the actions of these alleged gang members who have held a community hostage are real and have real consequences that the FBI NY Metro Safe Streets Task Force, the NYPD, and our law enforcement partners won’t allow them to escape,” said FBI Assistant Director-in-Charge Rodriguez.
“As alleged, the members of the Cypress Hills neighborhood have seen drugs and guns pour into our streets. The department targeted the crime with the same precise, targeted policing that has been used in the hundreds of arrests we have made in recent months,” said Police Commissioner Bratton. “This is the latest in our increasing and on-going efforts to arrest gangs and crews who carry weapons, deal drugs, or commit violence. Thanks as always to the FBI and the Eastern District of New York for their continued commitment to making our city safer with today’s enforcement.”
As alleged in the various documents filed in court by the government, the Cypress Hills Houses (“Cypress”) have been besieged in recent years by gang- and drug-related violence, including numerous homicides and a significant number of non-fatal shootings. In response to this criminal activity inflicted on the residents of the more than 1,400 apartments in Cypress, since November 2015, the FBI, the NYPD, and the U.S. Attorney’s Office have been conducting an investigation of a neighborhood-based street gang known as the Back Side crew – the Back Side refers to the section of Cypress that borders Euclid Avenue. The investigation revealed that in recent years, the Back Side crew has closely aligned with members of the Team Side crew – the Team Side refers to the section of Cypress that borders Fountain Avenue – and that some members of the two crews self-identify as members of the Crips criminal street gang.
The government’s investigation included court-authorized wiretaps of telephones used by the defendants, which confirmed the existence of a large-scale drug trafficking operation and in which all of the defendants charged in United States v. Renee Belardo, et al., 16-CR-297 (AMD), one of the indictments unsealed today, were active participants. During just a five-month period, that operation was responsible for the distribution of more than a kilogram of cocaine powder that was cooked into more than 280 grams of crack cocaine and distributed in and around Cypress and upstate New York.
The investigation also revealed that some of the defendants were involved in firearms trafficking, illegal weapons possession, and other criminal conduct, including a large-scale and fraudulent credit card scheme. On May 3, 2016, pursuant to a lawfully-authorized search warrant, the FBI seized and searched a Fed-Ex package that one defendant attempted to ship to a co-conspirator in Georgia containing more than 1,300 fraudulently manufactured credit cards that bore no name or stored information.
The other charging instruments unsealed today include three indictments: United States v. Jason Soto, 16-CR-298 (ILG); United States v. James Young, 16-CR-296 (BMC); United States v. Darnell Clinkscale, 16-CR-299 (ARR); and two criminal complaints: United States v. Guillermina Escobar, 16-M-483; and United States v. Nicholas Medina, 16-M-481.
If convicted of the narcotics charges, Tyriek Hankins, Isiah Sadler, Anthony Keitt, Michael Vailes, Dimas Perez, and Ronald Jackson each face a maximum of life imprisonment.
The charges are all merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Margaret Gandy and Andrey Spektor are in charge of the prosecution.
The Defendants:
RENEE BELARDO
Age: 30
Brooklyn, New YorkDARNELL CLINKSCALE
Age: 28
Brooklyn, New YorkGUILLERMINA ESCOBAR
Age: 26
Brooklyn, New YorkTYRIEK HANKINS
Age: 29
Brooklyn, New YorkRONALD JACKSON
Age: 37
Utica, New YorkANTHONY KEITT
Age: 36
Brooklyn, New YorkNICHOLAS MEDINA
Age: 18
Brooklyn, New YorkDIMAS PEREZ
Age: 38
Brooklyn, New YorkRAFAEL PEREZ
Age: 50
Brooklyn, New YorkISIAH SADLER
Age: 31
Brooklyn, New YorkJASON SOTO
Age: 27
Brooklyn, New YorkCHERENA SWAIN
Age: 29
Brooklyn, New YorkMICHAEL VAILES
Age: 29
Brooklyn, New YorkJAMES YOUNG
Age: 31
Brooklyn, New YorkMember of A Mexican Sex Trafficking Ring Pleads Guilty to Forcing Woman into ProstitutionRead the Press Release
A member of a Mexican sex trafficking organization, Paulino Ramirez-Granados, has pleaded guilty to federal charges relating to the sex trafficking of a woman from October 2000 to December 2008. The guilty plea was entered before United States District Judge Kiyo A. Matsumoto at the U.S. Courthouse in Brooklyn. When sentenced, Ramirez-Granados faces a mandatory minimum sentence of 15 years’ imprisonment and a maximum sentence of life imprisonment.
The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Angel Melendez, Special Agent-in-Charge, New York Field Office, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI). In announcing the guilty plea, Mr. Capers extended his grateful appreciation to HSI, the agency responsible for leading the government’s investigation.
At today’s proceeding, Ramirez-Granados admitted to bringing a woman from Mexico to New York between October 2000 and December 2008, and forcing her, using threats and violence, to work as a prostitute in Queens, New York, and elsewhere. Ramirez-Granados also admitted that he obtained money from the prostitution that his victim was forced to perform. Pursuant to his plea agreement with the government, Ramirez-Granados also admitted to trafficking an additional victim and agreed to pay restitution to both victims.
As set forth in court filings, between October 1998 and June 2011, members of the Granados sex trafficking organization, including Ramirez-Granados, illegally smuggled young women into the United States, where they were forced to work as prostitutes in New York City and elsewhere. The organization collected profits from the victims’ activities. When victims refused to work or resisted, members of the organization beat and sexually assaulted the victims, and threatened the victims’ family members in Mexico, including the victims’ children.
To date, 13 members of the Granados organization have been indicted in the Eastern District of New York on sex trafficking charges. Twelve have been arrested, and one remains a fugitive. Two high-ranking members of the group, Eleuterio Granados-Hernandez and Samuel Granados-Hernandez, who are brothers, pled guilty to sex trafficking and were sentenced by Judge Kiyo A. Matsumoto in 2014 to 22 years and 15 years, respectively.
During the course of the investigation, law enforcement identified and rescued over 20 additional victims — all Mexican nationals. Several victims were sexually assaulted by their traffickers, while others were physically assaulted. All the victims said the traffickers threatened to harm their family members.
The government’s case is being prosecuted by Assistant United States Attorneys Soumya Dayananda and Jennifer Carapiet.
The Defendant:
Name: PAULINO RAMIREZ-GRANADOS
Age: 38E.D.N.Y. United States v. Paulino Ramirez-Granados, 11-CR-557 (KAM)
President of Pharmaceutical Companies Sentenced to 60 Months in Prison for Long-Running Scheme to Sell Misbranded and Unapproved Chemotherapy and Other Prescription DrugsRead the Press Release
Earlier today in Central Islip, NY, William Scully, the president of Pharmalogical, Inc. (Pharmalogical) d/b/a Medical Device King and MDK, and Taranis Medical Corp. (Taranis), was sentenced to 60 months’ imprisonment and ordered to forfeit to the government close to $900,000 in criminal proceeds, following his conviction on November 12, 2015, after a six-week jury trial, of 64 felonies for mail and wire fraud, violations of the Food Drug & Cosmetic Act (FDCA), unlicensed wholesale distribution of prescription drugs, and multiple related conspiracy charges.
The convictions arose from Scully’s leadership role in a long-running scheme to sell misbranded and unapproved pharmaceutical products, including chemotherapy drugs for infusion into Stage 4 cancer patients, to medical providers across the United States. Evidence elicited at trial from 40 witnesses established that Scully deceived a wide array of doctors and cancer clinics into believing that he was selling legitimate FDA-approved products when, in reality, he was selling unapproved products imported through a series of unidentified middlemen in Turkey and elsewhere overseas. Many of the products Scully sold were highly sensitive, so-called “cold-chain” biologic drugs that did not have FDA-required warnings of potentially deadly side effects. The sentencing proceedings were held before U.S. District Judge Arthur D. Spatt.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Director George M. Karavetsos, Food and Drug Administration, Office of Criminal Investigations, New York.
“Those considering bypassing the FDA’s regulatory authority by selling unapproved and misbranded pharmaceutical products jeopardize the health and well-being of our nation’s patient population. All such individuals are on notice that they will be prosecuted to the fullest extent of the law,” stated United States Attorney Capers. Mr. Capers expressed his grateful appreciation to the FDA for its assistance in the investigation and prosecution of the defendant.
“This sentence reflects the serious nature of the defendant’s actions,” said FDA Office of Criminal Investigations Director Karavetsos. “Americans must have confidence that the drugs they are receiving are safe, effective and fully comply with U.S. laws. Our office will aggressively pursue those who place patients at risk and who seek to profit from the importation and distribution of potentially dangerous foreign unapproved drugs.”
Scully owned and operated Pharmalogical, MDK, and Taranis, which collectively sold over $17 million in pharmaceutical drugs and devices. Scully purchased these products through wholesalers overseas and received them in the United States with shipping labels stating “product samples” with “no commercial value,” even though the packages often contained tens of thousands of dollars of misbranded and unapproved prescription drugs. Scully would then execute “bait-and-switch” transactions with doctors by advertising FDA-approved products on his website but then sending them misbranded and unapproved products. Several doctors and health care professionals testified at trial that Scully deceived them into believing that the drugs they were purchasing were FDA-approved and legal. Ultimately, the drugs were infused into patients, including cancer patients and patients with Crohn’s disease.
Scully continued to sell these drugs well after his office was searched by FDA agents and all of his existing products were seized. To conceal the continued sales, he covertly set up a new company, Taranis, which he operated without a license and out of a storage space where he kept the drugs. Even after that storage space was searched and additional products were seized, Scully continued selling products to unsuspecting doctors.
The government’s case was prosecuted by Assistant United States Attorneys Charles P. Kelly and Kenneth M. Abell.
The Defendant:
WILLIAM SCULLY
Age: 47
Residence: Commack, New York